Trying to recover from lows in several weeks, still looking vulnerable

• AUD / USD was unable to sustain gains on Wednesday and turned negative in European hours.
• The setup seems skewed in favor of the downside.
• The attempted recovery move could continue to face stiff resistance near the 0.7360-65 area.

The AUD / USD pair was unable to capitalize on the modest bounce from three-week lows and was met with new offers on Wednesday. The pair maintained its offered tone during the first half of the European session and fell to 0.7322. Before US data it operates in the area of ​​0.7330.

The US dollar remained supported by market expectations that the Federal Reserve will begin cutting stimulus earlier than previously anticipated. This, along with the nervousness over new cases of covid-19, further supported the refugee claim for the greenback and put some additional pressure on the Australian.

Looking at the technical outlook, the AUD / USD recovery movement faltered near a bullish short-term support line. The aforementioned support turned resistance is currently near the 0.7360-65 supply zone, which should now act as a key turning point for short-term traders.

The technical indicators on the hourly and day charts maintained their bearish bias and are still far from being in oversold territory. The setup favors bearish traders and supports the prospects for the resumption of the downtrend seen in the last three months or so.

With that said, it will still be prudent to wait for some follow-up selling below the 0.7300-0.7290 region, to new lows this year before positioning for any further downward movement. AUD / USD could accelerate the pullback towards intermediate support at 0.7230-25 en route to 0.7200.

On the other hand, the 0.7360-65 region could continue to act as immediate strong resistance. Any further bullish movement could be seen as a short opportunity near 0.7400.

AUD / USD day chart