AUD/USD sticks to intraday losses, holds above mid-0.7400s

The AUD/USD pair maintained its offered tone through the first half of the European session and was last seen hovering near the 0.7465 region, just a few pips above daily lows.

The pair failed to capitalize on the previous day's positive move, instead met with some fresh supply on Thursday and was pressured by a combination of factors. The Australian state of Victoria was ordered into a five-day lockdown on Thursday following a spike in COVID-19 infections, which, in turn, acted as a headwind for the AUD/USD pair.

Apart from concerns about the spread of the highly contagious Delta variant of the coronavirus, a slowdown in Chinese economic growth exerted some additional pressure on the China-proxy aussie. In fact, China's annualized GDP growth for the second quarter of 2021 stood at 7.9% as against consensus estimates pointing to 8.1% and 18.3% previous.

The negative factors, to a larger extent, were offset by a softer tone surrounding the US dollar, which was seen as the only factor lending some support to the AUD/USD pair. The greenback was weighed down by an extension of the previous day's sharp decline in the US Treasury bond yields and the Fed Chair Jerome Powell's dovish testimony.

During the semi-annual congressional testimony, Powell reiterated that the spike in inflation was only temporary. His remarks overshadowed this week's inflation figures, which showed that the US producer prices posted their biggest annual increase in nearly 11 years and consumer prices jumped to the highest level in more than 13 years in June.

Looking at the broader picture, the AUD/USD pair has been oscillating in a narrow band over the past one week or so. The range-bound price action constitutes the formation of a rectangle, which might be categorized as a bearish consolidation phase before the next leg down. The technical set-up supports prospects for further near-term downfall.

Market participants now look forward to the US economic docket, featuring the releases of the usual Initial Weekly Jobless Claims and Philly Fed Manufacturing Index. This, along with the US bond yields and Powell's second day of congressional testimony, will influence the USD price dynamics and produce some short-term trading opportunities around the AUD/USD pair.

Technical levels to watch