AUD / USD Consolidates Bounce Above 0.7450 Before Powell

• AUD / USD consolidates the recovery above 0.7450 amid a pullback in the USD.
• The AUD continues to be weighed down by covid concerns in Australia.
• The focus remains on Fed Chairman Powell for a new direction.

After finding strong buying near 0.7435, the pair AUD/USD it has moved higher, now consolidating the bounce above 0.7450 amid cautious market sentiment.

On Tuesday, warmer-than-expected US inflation data spooked markets, knocking global equity markets down while benefiting the safe-haven USD. AUD / USD fell to 0.7427 after the release of the US CPI.

Risk sentiment remains sour ahead of Fed Chairman Jerome Powell’s testimony on Wednesday as markets expect Powell to hint at a likely normalization of monetary policy given rising inflation.

The perceived riskier AUD’s recovery therefore appears to be at risk, although the recent pullback in the USD has offered some respite to the pair’s bulls. The continued rally in the currency pair can also be associated with the advance in the price of gold, which benefits the Australian dollar tied to commodity prices.

For the remainder of the day, USD price action amidst Treasury yield dynamics will continue to influence the pair. Investors, meanwhile, remain concerned about the rapid spread of the Delta variant of covid in Australia, with seven cases reported in Melbourne as Sydney battles highly contagious outbreaks.

Technically, the AUD / USD pair is about to extend its decline in the short term. The 4-hour chart shows that it is currently moving below all of its moving averages, while technical indicators are heading lower into negative levels. The pair posted an annual low of 0.7409 last week, with a break below the level favoring a continued slide towards the 0.7250 / 60 price zone. Support levels: 0.7410, 0.7370 and 0.7320. Resistance levels: 0.7490, 0.7530 and 0.7570, explains Valeria Bednarik, chief analyst at FXStreet.

AUD / USD additional levels