FX

AUD/USD rebounds to 0.7350 on improved risk sentiment

  • AUD/USD reversed its direction in the second half of the day.
  • US Dollar Index looks to snap four-day winning streak. 
  • Wall Street’s main indexes continue to trade in the positive territory.

The AUD/USD pair dropped to its lowest level of 2021 at 0.7290 during the European trading hours but managed to stage a recovery in the American session. As of writing, the pair was up 0.28% on a daily basis at 0.7350.

DXY rally loses steam

Earlier in the day, the data from Australia revealed that the Westpac Leading Index declined to -0.06 in June from 0.04 in May. Furthermore, the Australian Bureau of Statistics announced that Retail Sales contracted by 1.8% in June, missing the market expectation for a decline of 0.5%.

In addition to the disappointing data releases, the broad-based USD strength weighed on AUD/USD during the first half of the day as the US Dollar Index (DXY) climbed to its highest level since early April at 93.19.

Nevertheless, the positive shift witnessed in market sentiment helped the risk-sensitive AUD find demand and forced the greenback to weaken against its rivals. Currently, the DXY is losing 0.17% on the day at 92.80 and looking to snap a four-day winning streak. Reflecting the risk-positive market environment, the S&P 500 Index, which gained more than 1% on Tuesday, is up 0.42% at 4,341.

On Thursday, the National Australia Bank’s Business Confidence for the second quarter will be looked upon for fresh impetus.

Technical levels to watch for

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