- A pullback in US bond yields weighs on the USD and helps AUD / USD regain traction on Thursday.
- Falling commodity prices and a sharp decline in equity markets limit earnings from the higher perceived risk AUD.
- A sustained break below the 0.7715-10 area (weekly lows) is needed to confirm a bearish breakout.
The pair AUD/USD it has returned a part of its intraday gains and has fallen slightly during the European session on Thursday. At the time of writing, the pair remains positive on the day. around the region of 0.7750.
As investors look beyond the bullish FOMC minutes, a modest pullback in US Treasury yields has not helped the US dollar capitalize on the previous day’s rebound from lows of several months. This, in turn, has been seen as a key factor that has provided a modest intraday rise to the AUD / USD pair.
The bulls have followed the signs of a surprise drop in the Australian unemployment rate to 5.5% in April. Meanwhile, the number of people employed unexpectedly fell by 30,600, although the disappointment was offset by an upward revision of the previous month’s figure to + 77,000 from 70,700.
The rebound, however, has lacked a strong following and has lost steam near the 0.7765 region amid the current slump in commodity prices. This, coupled with a sharp decline in US equity futures, has helped limit gains from the perceived riskier Australian dollar.
Despite the negative factors, the AUD / USD has, so far, managed to stay in positive territory above the weekly lows, around the 0.7710 region touched the previous day. This makes it prudent to wait for sustained weakness below the mentioned level before opening bearish positions.
Market participants are now awaiting the US economic calendar, which includes the release of the Philadelphia Fed Manufacturing Index and initial weekly jobless claims. Apart from this, US bond yields and general market risk sentiment will influence the USD and could generate some momentum for the AUD / USD pair.
AUD / USD technical levels
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