AUD/USD: broad based USD strength caps Chinese data-led gains

The AUD/USD pair failed to build on Chinese trade data-led early gains beyond mid-0.7600s and has now retreated from session peaks.

Currently trading around 0.7635-40 band, the pair initially gained some traction after Chinese trade data for Jan. surpassed even the most optimistic estimated and came-in to show a surplus of $51.35 billion as compared to $48.50 billion expected and $40.71 billion recorded in December.

The up-move, however, lacked follow through momentum amid resurgent greenback demand following Trump’s talks on unveiling a tax plan in coming weeks. The comments revived optimism expectations of pro-growth policies and lifted the US Treasury bond yields across all maturities, eventually capping further up-move for higher-yielding currencies – like the Aussie. 

In addition to this, the RBA's quarterly Statement on Monetary Policy (SoMP), with the central bank trimming its near-term growth outlook, also undermined the Australian Dollar and restricted the major within its three-day old trading range.

Later during NA session, the release of Prelim UoM Consumer Sentiment index from the US would now be looked upon for some fresh impetus. 

Technical levels to watch

Bulls would be awaiting a clear break through 0.7650-55 area above which the pair is likely to dart towards 0.7700 handle before aiming to test Nov. 2016 daily closing highs resistance near 0.7745-50 region.

On the flip side, 0.7610-05 region remains immediate support to defend, which if broken would accelerate the slide towards 0.7555-50 horizontal support, en-route 0.7535-30 region.