AUD/USD clings to modest recovery gains above 0.7600 ahead of US data

AUD/USD is edging lower after dropping to multi-week lows.
US Dollar Index stays flat above 91.00 on Wednesday.
Investors await ADP Employment Change and Services PMI data from US.

The AUD/USD pair slumped to its lowest level since late December at 0.7563 on Tuesday and seems to have gone into a consolidation phase on Wednesday. As of writing, the pair was up 0.2% on the day at 0.7621.

RBA’s Lowe reaffirms dovish outlook

On Tuesday, the dovish shift seen in the Reserve Bank of Australia’s (RBA) policy put the AUD under pressure against its rivals. Additionally, the broad-based USD strength didn’t allow AUD/USD to stage a rebound.

Commenting on the RBA’s policy decision, RBA Governor Phillip Lowe said on Wednesday that they would have an “unwelcome upward pressure” on the AUD is they were not to extend quantitative easing. Lowe further reiterated that they will continue to provide a very significant monetary support “for some time.” The AUD’s strength following these remarks suggests that the currency is making a technical correction rather than a fundamentally driven recovery.

With the greenback struggling to preserve its strength ahead of key macroeconomic data releases from the US, AUD/USD is holding on to modest daily gains. As of writing, the US Dollar Index was unchanged on the day at 91.20.

Later in the session, the ADP Employment Change and the ISM Services PMI data from the US will be watched closely by market participants. Additionally, Chicago Fed President Charles Evans, Dallas Fed President Robert Kaplan and St. Louis Fed President James Bullard will be delivering speeches.

Technical levels to watch for