- AUD/USD retreated around 100 pips from five-month tops set earlier this Wednesday.
- The risk-on mood, sustained USD selling bias helped limit the downside for the aussie.
- The USD selling remained unabated despite the better-than-expected ADP report for May.
The AUD/USD pair retreated further below the 0.6900 mark and refreshed daily lows during the early North American session, albeit lacked any follow-through selling.
The pair failed to capitalize on its early uptick to five-month tops and witnessed a modest intraday pullback from the vicinity of the key 0.7000 psychological mark. Extremely overbought conditions on short-term charts turned out to be a key factor behind the pair's downfall of around 100 pips.
However, the upbeat market mood, supported by growing optimism about a global economic recovery, continued lending some support to the perceived riskier Australian dollar. This coupled with sustained US dollar selling bias further contributed towards limiting any sharp fall for the AUD/USD pair.
The USD remained depressed and failed to gain any respite from Wednesday's release of the ADP report, which showed that private-sector employment in the US declined by 2.76 million in May. The reading was much better than even the most optimistic estimates, albeit did little to impress the USD bulls.
Wednesday's US economic docket also highlights the release of ISM Non-Manufacturing PMI, which might influence the USD price dynamics and produce some meaningful trading opportunities. However, the data is unlikely to be a major game-changer ahead of Friday's release of the closely watched NFP report.
Technical levels to watch
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