AUD/USD holds steady below 0.7350 amid covid woes, softer US dollar

AUD/USD is in bearish consolidation below 0.7350.
Dollar’s pullback offers some respite to AUD bulls but for how long?
Covid concerns weigh on the aussie, with eyes on the US data.

AUD/USD is trading modestly flat so far this Friday, confined in a 15-pips narrow range just below 0.7350.

At the time of writing, the aussie is trading at 0.7334, on track to book a minor weekly loss, as the 2021 lows of 0.7288 remain on the sellers’ sight.

The relentless rise in the Delta covid variant cases in Australia, with the country’s most populous state of New South Wales (NSW) reporting 390 new infections and likely to continue rising in the coming days, continues to weigh negatively on the domestic currency.

The National Cabinet is due to meet later on Friday to discuss the covid situation in the country and could resort to further hardening of the border controls within Australia.

Amidst surging covid cases, investors have pushed back the Reserve Bank of Australia’s (RBA) tapering expectation, keeping the AUD bulls on the defensive. Traders now await the central bank’s minutes next Tuesday for fresh insights into the RBA’s thinking.

Meanwhile, the monetary policy divergence between the Fed and RBA continues to favor the greenback. Upbeat US PPI data revived the Fed’s tapering bets and revived the US dollar bulls, although the greenback is biding time ahead of the critical US Michigan Consumer Sentiment data due later today in the NA session.

AUD/USD technical levels

“The descending trendline from the above high acts as a strong resistance for the pair. The trendline coincides with the break of the 20-day Simple Moving Average (SMA) at 0.7583. That said, if price breaks and sustains below the intraday session, then it could move toward the low of August 11 at 0.7322, which is also a double support formation,” FXStreet’s Analyst, Rekha Chauhan notes.