AUD/USD recovers early losses, eyeing 0.75 mark ahead of FOMC minutes

The AUD/USD pair has managed to recover all of its early losses and is currently placed near session tops around 0.7475-80 region.

Spot came under some fresh selling pressure on Wednesday after Moody's downgraded China's sovereign rating citing eroding financial strength and slowing growth. The news weighed on China-proxy Australian Dollar and extended the pair's overnight retracement from 3-week tops, beyond the key 0.75 psychological mark.

   •  China: Rating downgrade by Moody’s suggest financial strength will erode in future – RBC CM

However, a modest pull-back in the US treasury bond yields, which failed to assist the US Dollar's recovery move from six-month lows, extended some support and helped the pair to bounce back. Meanwhile, the prevalent negative trading sentiment around commodity space, especially copper, did little to provide an additional boost and has been one of the key factors keeping a lid on the pair's recovery move.

Investors' attention on Wednesday would remain glued to the much awaited FOMC meeting minutes. Given that the markets are already pricing-in an eventual June Fed rate-hike action, clues over the timing of next rate-hike move would set the near-term tone for higher-yielding currencies - like the Aussie. 

   •  FOMC Minutes will provide the largest event risk today - TDS

In the meantime, the US economic docket, featuring the release of existing home sales data, would be looked upon for short-term momentum play ahead of the big event risk.

Technical levels to watch

Bulls would be eyeing for a move beyond the 0.75 handle, above which the pair is likely to aim towards testing 50-day SMA hurdle near 0.7525-30 region ahead of 100-day SMA important barrier near 0.7555 level. Meanwhile on the downside, 0.7440 level now seems to have emerged as immediate support, which if broken is likely to accelerate the slide towards the 0.7400 handle en-route 0.7375 support.