AUD/USD extends recovery move, at session tops near 0.7370

After yesterday's slump to fresh 4-month low, the AUD/USD pair staged a goodish recovery and has now moved back above mid-0.7300s.

A modest retracement in the US treasury bond yields undermined the US Dollar demand and provided a much needed respite for higher-yielding currencies - like the Aussie. Adding to this, the prevalent risk-on environment and minor recovery in commodity prices further collaborated to the pair’s recovery move from the lowest level since Jan. 9.

Meanwhile, traders took little cues from today's Chinese macro data that showed consumer prices for April rose 1.2% y-o-y that seems to have been negated by a slight disappointment from producer prices. 

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It, however, remains to be seen if the pair could build on the early recovery move or the bounce is utilized to initiate fresh bearish positions amid growing expectations for an eventual Fed rate-hike action at its June meeting.

In absence of any major market moving economic releases from the US, the pair remains at the mercy of broader market risk sentiment and the US bond yield dynamics ahead of inflation figures and retail sales data from the US, due later this week.

Technical levels to watch

From current levels, the pair is likely to confront immediate resistance near 0.7375-80 area, above which a fresh bout of short-covering could lift the pair beyond the 0.7400 handle towards its next hurdle near 0.7425-30 band.

On the flip side, weakness back below 0.7345-40 region is likely to accelerate the slide towards the 0.7300 handle before the pair eventually drops to test its next support near 0.7285-80 horizontal level.