AUD/USD loses traction after testing 0.7600, looks to post modest daily gains
- AUD/USD remains on track to close third straight day higher.
- US Dollar Index turns positive on the day following the earlier decline.
- Business activity in US private sector continued to expand at a strong pace in June.
The AUD/USD pair climbed to a daily high of 0.7599 in the early trading hours of the American session on Wednesday but struggled to preserve its bullish momentum. As of writing, the pair was up 0.28% on a daily basis at 0.7574 and was on track to close the third straight in the positive territory.
DXY rebounds to 91.80
The selling pressure surrounding the USD helped AUD/USD push higher during the first half of the day. The US Dollar Index (DXY), which registered losses on the first two days of the week, dropped to 91.51 but managed to reverse its direction. As of writing, the DXY was up 0.1% on the day at 91.80.
Atlanta Federal Reserve President Raphael Bostic said on Wednesday that they could see a decision on asset tapering in the next three-to-four months and acknowledged that he was one of the seven policymakers who expected a rate hike in 2022. These comments helped the greenback regather strength and forced AUD/USD to retreat from highs.
Meanwhile, the data from the US showed that the Markit Manufacturing PMI rose to a new series-high of 62.6 in June's preliminary reading. On the other hand, the Markit Services PMI fell to 64.8 from 70.4 and fell short of the market consensus of 70.
Assessing AUD/USD's near-term outlook, "downward momentum is beginning to wane and the prospect for AUD to weaken to 0.7450 has diminished," said UOB Group analysts. "However, only a break of 0.7600 (no change in ‘strong resistance’ level) would indicate that the weak phase in AUD has come to an end."
AUD/USD: A move to 0.7450 now loses traction – UOB.
Technical levels to watch for