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AUD/USD recovers early lost ground, lacks follow-through

1/29/2019, 4:23:27 PMMarket Analysis
AUD/USD recovers early lost ground, lacks follow-through

The AUD/USD pair reversed an early Asian session dip to an intraday low level of 0.7138 and refreshed session tops in the last hour, albeit lacked any strong follow-through.

The pair extended overnight rejection slide from the 0.7200 handle and lost some additional ground on Tuesday following the release of mixed NAB business conditions data, showing that business conditions index slumped to 2 points for December while the gauge measuring business confidence steadied at 3.

Meanwhile, concerns over yet unresolved US-China disputes resurfaced after the US Justice Department charged China's Huawei Technologies with fraud and obstruction, which was now seen to complicate the upcoming high-level trade talks and dented sentiment surrounding the China-proxy Australian Dollar. 

Further downside, however, remained limited on the back of a subdued US Dollar price action, which continues to be weighed down by dovish Fed expectations. Hence, the key focus will be on the highly anticipated two-day FOMC monetary policy meeting starting today. 

Heading into the key event risks, today's only scheduled release of the Conference Board's US consumer confidence index will now be looked upon for some short-term trading opportunities ahead of the Aussie Q4 consumer inflation figures (CPI) on Wednesday.

Technical levels to watch

Any subsequent up-move might continue to confront immediate resistance near the 0.7200-0.7205 region, above which the pair seems all set to aim towards challenging the 0.7230-35 supply zone, or monthly tops. On the flip side, the 0.7140-35 region might continue to protect the immediate downside, which if broken might prompt some additional weakness back towards the 0.7100-0.7095 region.