AUD/USD recovers beyond 0.7200 handle, eyeing US data for further cues

The AUD/USD recovery from day's low of 0.7161 gained traction after stops got triggered above 0.7200 handle, lifting the pair to session high level of 0.7227.

Earlier during Asian session, the pair extended its slide below 0.7200 handle after a downbeat Private Capital Expenditure reading for Q1 2016, showing a steeper than expected capex decline of 5.2% as compared to -3.2% expected and an upwardly revised 1.8% in the previous quarter.

The pair, however, shrugged-off the negative data and recovered from near-term oversold conditions to move back above 0.7200 level. Investors now turn their focus towards the US durable goods orders and weekly jobless claims data along with speeches from FOMC members that would determine further intra-day direction for the pair.

From technical perspective, the current pull-back could be attributed to short-covering as the pair has already broken below the very important 200-day SMA and had repeatedly failed to climb back above this important moving average. Hence, any recovery back towards 200-day SMA might be looked upon as opportunity to build on to near-term bearish bets.

Technical levels to watch

From current levels, a sustained trade above 0.7225-30 area seems to extend the short-covering rally towards 200-day SMA support turned resistance near 0.7255-60 region, which if conquered should aim for 100-day SMA resistance near 0.7340-45 zone.

Meanwhile on the downside, 0.7180 recent daily closing lows remains immediate strong support to watch for. A convincing break below this immediate support has the potential to drag the pair immediately towards late Feb. lows support near 0.7110-05 region. The fall could further get extended towards Feb. daily closing lows support near 0.7040-35 area.