After yesterday's sharp reversal, the AUD/USD pair regained traction on Wednesday, albeit was seen struggling to build on to its up-move further beyond the 0.7600 handle.
The latest hawkish comments by ex-RBA board member John Edwards that raised expectations of RBA rate hike action, sooner rather than later, and lifted the Australian Dollar across the board. This coupled with the ongoing slump in the US Dollar further collaborated to the pair's recovery back above the 0.7600 handle.
• Central banks shifting gear towards more hawkish narrative - AmpGFX
Moreover, a mildly positive sentiment around commodity space, especially copper, provided an additional boost to the commodity-linked currency and remained supportive of the bid tone surrounding the major.
The pair, however, lacked any strong follow through momentum amid surging US Treasury bond yields, which tend to weigh on higher-yielding currencies - like the Aussie. Hence, traders are likely to remain on the sidelines and wait for a strong follow through buying interest further beyond 0.7625-35 strong supply zone before positioning themselves for any additional near-term appreciating move.
Today’s US economic docket features the release of pending home sale data, later during the NA session. In the meantime, the US bond yield dynamics and broader market risk sentiment would continue to act as key determinants of the pair’s movement on Wednesday.
Technical levels to watch
On the upside, 0.7625-35 region remains the immediate strong hurdle, which if conquered now seems to trigger a short-covering rally towards 0.7670-75 intermediate resistance en-route the 0.7700 handle.
On the flip side, 0.7585-80 region is likely to protect the immediate downside, which if broken might turn the pair vulnerable to head back towards retesting the very important 200-day SMA support near 0.7535-30 region.
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