AUD/USD sticks to strong gains near mid-0.7200s, moves little post-US Retail Sales
- AUD/USD gained strong traction on Wednesday and recovered further from the two-week low.
- The risk-on impulse undermined the safe-haven USD and benefitted the perceived riskier aussie.
- Softer US Retails Sales data failed to impress the USD bulls or provide any impetus to the major.
- The market focus remains glued to the outcome of a two-day FOMC monetary policy meeting.
The AUD/USD pair maintained its bid tone through the early North American session and held steady around mid-0.7200s following the release of the US Retail Sales data.
Following an early dip to the 0.7180 region, the AUD/USD pair attracted fresh buying on Wednesday and built on the previous day's modest bounce from the two-week low. Hopes for a diplomatic solution to end the war in Ukraine, along with the Chinese government's promise to support stability in the stock market, boosted investors' confidence. This, in turn, prompted aggressive intraday selling around the safe-haven US dollar and benefitted the perceived riskier aussie.
On the economic data front, the US Retail Sales growth decelerated sharply and climbed 0.3% in February as against the 0.4% anticipated. Excluding autos, core retail sales also fell short of market expectations and recorded a modest rise of 0.2% during the reported month. The softer prints, however, were offset by an upward revision of the previous month's already strong readings, though failed to impress the USD bulls or provide any impetus to the AUD/USD pair.
Investors also seemed reluctant to place aggressive bets and preferred to wait for the outcome of a two-day FOMC monetary policy meeting. The Fed is scheduled to announce its decision later during the US session and kick start the policy tightening cycle. Investors will also look for fresh clues about the pace of future interest rate hikes. This will influence the near-term USD price dynamics and help determine the next leg of a directional move for the AUD/USD pair.
Technical levels to watch