- AUD/USD gained strong traction on Wednesday and recovered further from a two-week low.
- Risk appetite undermined the safe-haven USD and benefited the perceived riskier Aussie.
- Softer US retail sales data failed to impress USD bulls or provide any impetus to the pair.
- The market’s focus remains glued to the outcome of the two-day FOMC monetary policy meeting.
The pair AUD/USD maintained its offer tone in the early American session and held steady at the 0.7250 area after the release of US retail sales data.
After an initial drop to the 0.7180 region, the AUD/USD pair attracted fresh buying on Wednesday and built on the previous day’s modest rebound from a two-week low. Hopes for a diplomatic solution to end the war in Ukraine, coupled with the Chinese government’s pledge to support stock market stability, boosted investor sentiment. This, in turn, triggered aggressive intraday selling around the safe-haven US dollar and benefited the perceived riskier Aussie.
Turning to economic data, US retail sales growth slowed considerably, rising 0.3% in February versus 0.4% expected. Excluding autos, core retail sales also disappointed market expectations, posting a modest 0.2% increase over the reported month. However, the softer prints were offset by an upward revision of the previous month’s already strong readings, although they failed to impress USD bulls or provide any lift to the AUD/USD pair.
Investors also seemed reluctant to make aggressive bets, preferring to wait for the outcome of a two-day FOMC policy meeting. The Fed is expected to announce its decision later in the US session and kick-start the policy tightening cycle. Investors will also be looking for new clues about the pace of future rate hikes. This will influence the short-term USD price dynamics and help determine the next leg of a directional move for the AUD/USD pair.
Technical levels
Source: Fx Street
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