AUD/USD eases off highs as DXY starts to recover losses
- USD sell-off pauses in the early NA session.
- DXY recovers toward 92 on T-bond yields' upsurge.
- Wall Street opens the day lower.
The AUD/USD pair advanced to a fresh daily high at 0.7867 amid the selling pressure surrounding the USD but lost its momentum in the early NA session. As of writing, the pair was trading at 0.7834, still up 0.12% on the day.
The pair's price on Wednesday is being driven by the US Dollar Index. The market reaction to the Bloomberg report that claimed China was looking to stop purchasing US Treasury bonds dragged the DXY down to 91.66. However, with the 10-year T-bond yield gaining traction in the last couple of hours, the US Dollar Index began to retrace its losses and was last seen at 91.93, where it was down 0.33% on the day.
Moreover, Dallas Fed President Kaplan's recent hawkish comments seem to be providing an additional boost to the buck. Kaplan reportedly said that he was in favor of three more rate hikes in 2018 and added that they needed to be vigilant to make sure that the economy wasn't overheating.
Meanwhile, following the weak performance of major equity indexes in Asia and Europe, Wall Street started the day on a weak note, not allowing the risk-sensitive aussie to show resilience. At the moment, both the Dow Jones Industrial Average and the S&P 500 are down 0.3% in the session.
Technical levels to consider
The pair could encounter the first resistance at 0.7870 (Jan. 8 high) ahead of 0.7965 (Sep. 24 high) and 0.8000 (psychological level). On the downside, supports could be seen at 0.7815/10 (Jan. 4 low), 0.7740 (100-DMA/200-DMA) and 0.7650 (Dec. 21 low).