- AUD / USD found new offers near 0.7600 amid resurgent demand for the USD.
- The USD maintained its bid tone following the release of a softer US ISM services PMI for June.
- Market focus will remain on the FOMC Policy Meeting Minutes, to be released on Wednesday.
The pair AUD/USD trimmed a significant portion of its intraday gains to highs of over a week and has now fallen to the lower end of its intraday trading range, returning below 0.7550.
The pair struggled to capitalize on its strong intraday positive move and once again flopped near 0.7600. The US dollar found some support from the emergence of strong selling around the shared currency in reaction to the disappointing release of the ZEW survey results. This, in turn, was seen as a key factor prompting further selling around the AUD / USD pair.
Aside from this, concerns about the spread of the highly contagious Delta variant of the coronavirus continued to weigh on investor sentiment. This was evident from the cautious climate prevailing in the equity markets. This was seen as another factor that acted as a tailwind for the safe-haven dollar and pushed away flows from the perceived riskier Aussie.
The USD was stable and did not appear to be affected by the softer-than-expected US ISM services PMI, which fell to 60.1 in June from consensus estimates for a reading of 63.5. Added to this, the employment subcomponent also did not meet market expectations, although it was largely offset by a modestly better than expected Price Paid component from the report.
Meanwhile, diminishing the odds of a policy tightening by the Fed earlier than anticipated could prevent USD bulls from making aggressive bets and help limit the decline in the AUD / USD pair. The US mixed jobs report on Friday appeared to have convinced investors that the US central bank will wait a longer period before reducing its asset purchases or raising interest rates. This, coupled with a further downward leg in US Treasury yields, could undermine the USD.
Therefore, it will be prudent to wait for a strong follow-up sell before confirming that the recent bounce from the yearly lows has been exhausted and positioned for a further decline. Market focus will remain glued to Wednesday’s release of the FOMC Meeting Minutes. Investors will be looking for new clues on the monetary policy outlook from the US central bank, which will play a key role in influencing USD price dynamics and provide new directional momentum to the AUD / USD pair.
Technical levels
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