AUD / USD remains bearish below 0.7500, little moving after US data.

• AUD / USD witnessed an intraday trend reversal from multi-month highs touched earlier this Thursday.
• The risk aversion momentum and high US bond yields revived demand for US dollars and put some pressure on it.
• The lack of sales tracking warrants some caution before positioning for any corrective downturn.

The pair AUD/USD it remained on the defensive during the early days of the American session, although it has managed to recover from the pips of the daily lows. The pair was last seen trading just below the key psychological level of 0.7500, down more than 0.25% on the day.

The pair struggled to capitalize on its initial positive move to the highest level since early July and witnessed an intraday trend reversal from the 0.7535 area. The corrective pullback was sponsored by a positive rally in demand for the US dollar, which drew some support from the risk aversion momentum and high US Treasury yields.

Investors became nervous amid fresh concerns about possible contagion from the Evergrande debt crisis in China. The heavily indebted developer said Wednesday that a $ 2.6 billion stake in its real estate services unit failed. This, in turn, dampened investors’ appetite for perceived riskier assets and benefited the dollar as a safe haven.

Meanwhile, the yield on the 10-year US government bond remained stable near the 1.67% level, or the highest level since May, and extended additional support to the dollar. Investors appear to be convinced that a faster-than-expected rise in inflation could force the Fed to adopt a more aggressive policy response in 2022.

On the economic data front, US Initial Weekly Unemployment Claims fell to 290,000 during the week ending October 15 compared to expectations of a modest increase to 300,000 from 296,000 previously. This, to a greater extent, helped offset a weaker-than-anticipated Philadelphia Fed manufacturing index, which fell to 23.8 for the current month from 30.7 in September.

USD bulls did not appear to be affected by the mixed economic data, instead following signs of an extension of the recent rally in US bond yields. In fact, the yield on the 10-year US government bond yield remained stable near the 1.67% level, or the highest level since May amid expectations of an early policy tightening by the Fed.

This week’s regrettable macroeconomic releases in the United States (industrial production and housing market data) pointed to a weakening in economic activity. However, investors appear to be convinced that a faster-than-expected rise in inflation could force the Fed to adopt a more aggressive policy response and have been weighing the possibility of a rate hike in 2022.

Now it will be interesting if the AUD / USD pair can attract further buying at lower levels or if the pullback suggests that the recent strong positive move seen from the September lows has lost steam. However, the lack of strong follow-up selling warrants some caution before confirming that the pair has peaked.

Technical levels