AUD/USD recovers lost ground, still struggling to reclaim 0.7400 handle

Having posted a session low near 0.7365 region, the AUD/USD pair recovered early lost ground and jumped beyond 0.7400 handle.

The pair, however, lost its recovery momentum and has quickly reversed from session peak level of 0.7418 and has now drifted back below 0.7400 mark, albeit remained mildly in positive territory. 

In absence of any fresh economic development, the pair's recovery move could be attributed to short-covering as traders might be inclined to trim some of their bullish USD bullish bets amid thin liquidity conditions on the back of a holiday in the US. In fact, the overall US Dollar Index retreated from multi-year highs and has now drifted into negative territory. 

Moreover, positive sentiment surrounding base metals, especially Copper, is further boosting demand for commodity-linked currency - Aussie, and was supportive of the pair's recovery trend. Moving ahead, broader sentiment surrounding commodity prices might now influence the major from current levels. 

Further recovery was restricted as Wednesday’s FOMC meeting minutes reaffirmed market expectations that the Fed would eventually move towards raising interest rates at its meeting on December 13-14, which might continue to weigh on higher-yielding currencies – like Aussie. 

Technical levels to watch

A follow through buying interest above 0.7415-20 immediate resistance (session peak) is likely to get extended towards 0.7445 (yesterday's high) above which the pair seems all set to make an attempt towards reclaiming 0.7500 psychological mark. On the downside, sustained weakness back below 0.7380 level now seems to turn the pair vulnerable to break below session low support near 0.7365 and aim towards testing its next major support near 0.7330-25 region.

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