- AUD/USD saw some selling on Wednesday and moved further away from the yearly high.
- The overnight pullback could be seen as a false breakout through an uptrend channel.
- Dips towards the 0.7535-0.7530 area could be seen as a buying opportunity and remain limited.
The pair AUD/USD dipped on Wednesday and pulled back further from the highest level since June 2021, around the 0.7660 region touched the previous day. The pair remained on the defensive during the early hours of the American session and was last seen flirting with the daily low just above 0.7550.
The risk-off drive, as displayed by global equity markets, acted as a headwind for the perceived riskier Aussie. On the other hand, the big rally in US Treasury yields underpinned the US dollar. This, in turn, put some downward pressure on the AUD/USD pair.
That said, the prospect of more Western sanctions on Ukraine continued to support commodity prices, which should help limit deeper losses for the resource-linked Aussie. Other than this, a hawkish comment from the RBA on Tuesday warrants some caution for aggressive bear traders.
From a technical perspective, the sharp pullback overnight could be seen as a false breakout through an upsloping trend channel extending from the yearly low. That said, it will still be wise to wait for some follow-up selling before confirming that the AUD/USD has formed a short-term top.
Furthermore, the technical indicators on the daily chart maintained their bullish bias and are still far from overbought territory. Therefore, any further decline could attract some buying near the 0.7535-0.7530 area. This, in turn, should help limit the drop near the psychological level of 0.7500.
On the other hand, the upper end of the aforementioned channel, currently around the 0.7590 region, now seems to act as an immediate hurdle. Sustained strength beyond should allow the bulls to head back to reclaim the 0.7600 level and push the AUD/USD pair towards the yearly high around the 0.7660 area.
AUD/USD daily chart
Technical levels
Source: Fx Street
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