AUD/USD Price Analysis: 50% Fibo. level continues to cap the upside

• A goodish pickup in the USD demand prompted some selling around AUD/USD on Wednesday.
• A generally positive risk tone might help limit any deeper losses for the perceived riskier aussie.
• The technical setup supports prospects for the resumption of the recent downtrend trajectory.

The AUD/USD pair struggled to capitalize on its weekly gains recorded over the past two trading sessions and edged lower on Wednesday. The pair remained on the defensive near mid-0.7200s through the early North American session and moved little following the release of US Durable Goods Orders.

The US dollar was back in demand in the wake of a strong follow-through uptick in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond jumped back above the 1.30% threshold amid expectations that the Fed might still begin tapering its asset purchases in 2021.

That said, the underlying bullish tone in the markets acted as a tailwind for the perceived riskier aussie and helped limit any deeper losses for the AUD/USD pair. Investors also seemed reluctant to place aggressive bets ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium.

Looking at the technical picture, the recent bounce from the 0.7100 neighbourhood or YTD lows touched last Friday, stalled near a resistance marked by the 50% Fibonacci level of the 0.7427-0.7106 slide. The mentioned barrier, around the 0.7265-70 region should now act as a pivotal point for traders.

Meanwhile, technical indicators on the daily chart maintained their bearish bias. This, along with the fact that oscillators on the 1-hour chart have moved on the verge of drifting back into the negative territory, favours bearish traders and suggests that the recovery movement has already lost steam.

A subsequent slide below the 38.2% Fibo. level, around the 0.7225-20 region, will reaffirm the negative bias and prompt some technical selling. The AUD/USD pair might then accelerate the fall towards the 0.7180-75 area (23.6% Fibo. level) before aiming to challenge the 0.7100 round figure.

On the flip side, the 0.7260-70 region might continue to act as an immediate strong hurdle. A sustained strength beyond will be seen as a fresh trigger for bullish traders. The momentum could then push the AUD/USD pair further towards reclaiming the 0.7300 mark, or the 61.8% Fibo. level.

AUD/USD 4-hour chart

Technical levels to watch