AUD / USD bounces away from multi-month lows, still bearish just above 0.7300

• AUD / USD showed some resistance below 0.7300 and trimmed a portion of its intraday losses.
• Risk appetite fueled profit-taking around the safe-haven dollar and extended some support.
• The nervousness of COVID-19, the recovery of US bond yields should prop up the USD and limit the rise of the pair.

The pair AUD/USD it maintained its offered tone during the first half of the European session, although it has managed to bounce around 25-30 pips from the multi-month lows touched earlier this Wednesday. The pair was last seen trading around the 0.7315-10 region, shedding 0.25% on the day.

The prolonged lockdowns in Australia’s two most populous states, Sydney and Victoria, continued to act as a headwind for the Aussie, which was further pressured by disappointing macroeconomic data. This, coupled with a widespread strength in the US dollar, put some tracking pressure on the AUD / USD pair for the fifth day in a row.

However, a combination of factors helped the AUD / USD to trim some of its intraday losses to the lowest level since November 2020. The USD witnessed some profit taking from highs of more than three and a half months in the middle of a rally in equity markets, which in turn provided some support to the Aussie perceived as riskier.

That said, growing market fears about the potential economic consequences of the spread of the highly contagious Delta variant of the coronavirus should continue to support the dollar as a safe haven. Apart from this, a strong recovery in US Treasury yields should act as a tailwind for the dollar and limit the rise for the AUD / USD pair.

The fundamental backdrop remains tilted in favor of bearish traders and supports prospects for an extension of the ongoing downward trajectory. Therefore, any attempt at a recovery move could still be seen as a selling opportunity and risks fading away fairly quickly amid the absence of relevant economic releases in the US market.

Technical levels