- AUD/USD edged lower on Thursday and snapped three straight days of the winning streak.
- The set-up still seems tilted firmly in favour of bearish traders amid resurgent USD demand.
- Any attempted recovery move might be seen as a selling opportunity near the 0.7300 mark.
The AUD/USD pair witnessed some selling on Thursday and snapped three consecutive days of the winning streak amid resurgent US dollar demand. The pair maintained its offered tone through the early North American session and was last seen hovering near daily lows, around mid-0.7200s.
Investors now seem convinced that the Fed might still begin rolling back its pandemic-era stimulus amid easing worries about the economic fallout from the Delta variant of the coronavirus. This was evident from the ongoing rally in the US Treasury bond yields, which acted as a tailwind for the greenback.
The USD held on to its intraday gains after the US economic growth for the second quarter was revised higher to a 6.6% annualized pace from 6.5% estimated initially. The reading, however, was slightly lower than the 6.7% growth anticipated and was accompanied by a modest rise in the Initial Weekly Jobless Claims to 353K.
From a technical perspective, this week's strong recovery move from the vicinity of the 0.7100 mark, or YTD lows stalled ahead of the 0.7300 round-figure mark. Given the recent break below a one-month-old trading range, the emergence of fresh selling suggests that the near-term bearish trajectory might still be far from over.
The negative outlook is reinforced by the fact that technical indicators on the daily chart – though have recovered from lower levels – are still holding in the bearish territory. Moreover, oscillators on the 1-hour chart have been gaining negative traction, supporting prospects for a further intraday downfall.
A subsequent decline below the overnight swing lows, around the 0.7235 region, will reaffirm the bearish bias and turn the AUD/USD pair vulnerable. The downward trajectory could then drag the major further below the 0.7200 mark, towards testing the next relevant support near mid-0.7100s ahead of the 0.7120 area.
On the flip side, the 0.7280 zone now seems to have emerged as immediate strong resistance. Any subsequent positive move might be seen as a selling opportunity near the 0.7300 mark. This, in turn, might keep a lid on any further gains for the AUD/USD pair near the trading range support breakpoint, around the 0.7330 region.
AUD/USD 4-hour chart
