- AUD/USD faced rejection near the 0.7500 mark and stalled its recent bounce from YTD lows.
- COVID-19 jitters acted as a headwind for the aussie and exerted pressure amid stronger USD.
- The already stronger USD got an additional boost following the release of the US CPI report.
The AUD/USD pair witnessed some heavy selling during the early North American session and dived to fresh daily lows, around the 0.7425 region in the last hour.
The pair struggled to capitalize on its early positive move to levels just above the key 0.7500 psychological mark and met with some fresh supply on Tuesday. The intraday pullback dragged the AUD/USD pair back closer to YTD lows touched last Friday and was sponsored by a combination of factors.
Worries about the economic fallout from the spread of the highly contagious Delta variant of the coronavirus and indications that lockdown in Sydney could be extended acted as a headwind for the aussie. Apart from this, a modest US dollar strength exerted some fresh downward pressure on the AUD/USD pair.
The intraday USD buying picked up pace during the early North American session following the release of hotter-than-expected US consumer inflation figures. In fact, the headline CPI smashed expectations and accelerated to 5.4% YoY in June. Adding to this, CPI at the core level jumped 4.5% YoY during the reported month.
The data fueled speculations that the Fed is moving towards tightening its monetary policy stance sooner than anticipated. This, in turn, provided an additional boost to the already stronger greenback and was seen as a key factor behind the AUD/USD pair's latest leg of a sudden fall over the past hour or so.
From current levels, the next relevant support is pegged near YTD lows, around the 0.7410 area. Some follow-through selling will be seen as a fresh trigger for bearish traders and set the stage for the resumption of the recent downtrend. The AUD/USD pair might then aim to test the next relevant support near the 0.7320 region.
Technical levels to watch
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