- AUD/USD keeps rebound from nine-month low, mildly near intraday top of late.
- DXY pullback favors commodities, Antipodeans even as covid woes stay on the table.
- FOMC Minutes, geopolitical headlines could offer clear direction going forward.
AUD/USD picks up bids to refresh intraday top near 0.7270, up 0.20% on a day ahead of Wednesday’s European session. In doing so, the Aussie pair reacts to the US dollar’s pullback to not only snap the two-day downtrend but also consolidates the heaviest fall in the last two months.
That said, the US Dollar Index (DXY) drops to 93.05, down 0.10% intraday to snap a two-day uptrend and step back from the weekly top at the latest.
Although the worsening covid conditions in Australia and New Zealand keep the greenback buyers hopeful, cautious sentiment ahead of Federal Open Market Committee (FOMC) Minutes seems to probe the DXY bulls. Also, the market’s indecision over the Fed’s next moves following the latest Fedspeak and downbeat US Retail Sales challenge the DXY buyers. On Tuesday, Minneapolis Fed President Neel Kashkari’s repeat of tapering comments battles Fed Chairman Jerome Powell’s cautious optimism after the US Retail Sales for July dropped below -0.3% expected and +0.7% previous to -1.1% MoM.
As per the latest updates, NZ reports seven new covid cases versus the first marked from Auckland the previous day whereas Australia’s New South Wales report all-time high covid cases, propelling the national count to the fresh top since August 2020 with near 700 infections. Elsewhere, China’s COVID-19 cases eased but the fears that the US weekly infections will jump to 200,000 and the UK’s highest virus-led death toll since March keep highlighting Delta covid variant woes.
Talking about Aussie economics, Australia’s Westpac Leading Index for July dropped below -0.07% to -0.11% in early Asia. Following that, the Q2 2021 Wage Price Index also eased below 0.6% QoQ market consensus and prior readouts to 0.4%.
It’s worth mentioning that the mildly bid US 10-year Treasury yields and the S&P 500 Futures recovery also underpin the AUD/USD rebound.
Given the busy calendar in the west, amid the coronavirus fears, AUD/USD bears are likely to keep the reins even as FOMC minutes may extend the latest recovery moves on positive surprise.
Technical analysis
AUD/USD sellers flirt with October 2020 tops amid nearly oversold RSI and bearish MACD signals. However, a sustained trading below July’s low of 0.7288, quickly followed by the 0.7300 threshold, keeps the pair bears hopeful. Hence, October tops near 0.7240-45 and a four-month-old descending support line near 0.7220 remains as expected levels during the quote’s fresh weakness.