AUD/USD trims intraday losses, remains bearish below 0.7500

• AUD/USD struggled to find acceptance above 0.7500 and turned lower on Thursday.
• The Fed’s dovish outlook, high US bond yields supported the USD and put pressure on it.
• A positive risk tone extended support to the Australian dollar perceived as riskier and helped limit the decline.
• The pair reacted little to mixed US macro data as the focus remains on geopolitical developments.

The pair AUD/USD recovered a few pips from the daily low and was last seen trading around the 0.7480 region, down nearly 0.20% for the day.

Having struggled to find acceptance above the psychological 0.7500 level, the AUD/USD pair fell on Thursday and eroded a significant chunk of overnight gains to the highest level since November 2021. The intraday decline was sponsored by broad-based strength. US dollar, although a generally positive risk tone helped limit deeper losses for the perceived riskier Australian dollar.

The USD continued to receive support from growing acceptance that the Fed would adopt a more aggressive policy response to combat stubbornly high inflation. In fact, a host of influential FOMC members, including Fed Chairman Jerome Powell, have raised the possibility of a 50bp rate hike at the next policy meeting in May. This continued to act as a tailwind for the dollar.

The Fed’s dovish outlook was reinforced by rising US Treasury yields, which were supported by concerns that rising oil prices would put upward pressure on a inflation is already high. This, coupled with the lack of progress in the Russia-Ukraine peace talks, further benefited the dollar’s relative safe-haven status and weighed on the AUD/USD pair.

Turning to economic data, US Durable Goods Orders disappointed market expectations and fell sharply by 2.2% in February from a 1.6% rise in the previous month. Orders excluding transportation items also shrank 0.6% during the reported month compared to consensus estimates that point to a modest slowdown in growth to 0.6% from 0.8% in January.

This, however, was offset by weekly initial jobless claims, which fell to 187,000 during the week ending March 18 from the previous week’s upwardly revised reading of 215,000. The mixed figures did little to influence the USD or provide a significant boost to the AUD/USD pair, as the focus remains firmly glued to new developments surrounding the Russia-Ukraine saga.

Technical levels