AUD/USD deflates from 0.7330 as USD picks up pace

The bid tone around the US dollar appears to have grown last hours, fuelling a fresh selling-wave around AUD/USD.

AUD/USD holds above 5-DMA at 0.7309

Currently, the AUD/USD pair rises +0.14% to 0.7315, retreating from session highs previously posted at 0.7328. The AUD/USD pair made a solid comeback from near 0.7290 region, and tested daily R2 on 0.73 handle following the release of better-than expected Australian building consents data.

Australia's building approvals (Nov) came at +7.0% m/m vs +4.5% exp and -12.6% last, while the yearly reading stood at -4.8%y/y vs -5.7% exp and -24.9% last.

However, the upside lacked follow-through and the rate retraced to test 5-DMA amid resurgence of broad based US dollar strength, as the USD bulls continue to ride higher on upbeat US jobs data-led wave, which boosted expectations of a rate hike as early as March.

Further, warnings issued by the Australian government that the iron-ore and coal rally may not last, also dented the sentiment around the AUD, causing the prices to pullback from daily tops.

Later today, the major will get influenced by the US labor market conditions report and Fed speaks scheduled in the NA session. While Tuesday’s Aus retail sales and China’s CPI data will hold the key to determine next direction on the spot.

AUD/USD Levels to watch   

The pair finds the immediate resistance at 0.7327/28 (daily R1 & high) above which gains could be extended to the next hurdle located 0.7360 (50-DMA) and 0.7400 (zero figure). On the flip side, the immediate support located 0.7300 (round figure). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7260 (10-DMA) and below that at 0.7206 (Jan 4 low).