AUD/USD struggles to keep 0.7700 on US dollar bounce ahead of Aussie Retail Sales

• AUD/USD consolidates the heaviest losses in two weeks after rising to the fresh one-month high.
• On-going challenges to sentiment pulled back USD from following heaviest drop in 2021.
• RBA minutes reiterated unemployment, inflation as backing the easy money policy, PBOC left benchmark rates unchanged, as expected.
• Preliminary reading of Australia’s March Retail Sales will be the key.

AUD/USD licks its wounds around 0.7730 after barely saved from breaking down the 0.7700 threshold during the previous day’s fall. In doing so, the aussie buyers battle the bears who portrayed the biggest downside in nearly two weeks. Although the US dollar’s comeback could be cited as the major reason, cautious sentiment ahead of today’s Aussie data might as well gain the market’s attention as a catalyst.

Greenback’s corrective pullback, covid fears tame the bulls…

Following the heaviest drop in 2021, the US dollar index (DXY) bounced off the lowest levels in seven weeks and rose the most in April. While corrective pullback seems to back the greenback’s latest moves, the coronavirus (COVID-19) worries and the US-China, as well as Ukraine-Russia, tussles also weigh on sentiment.

Global weekly covid cases are up 12% and Russia is building a military near the border with Ukraine. Further, China warned other nations, indirectly those from the West, to not meddle in the country’s internal affairs.

Elsewhere, RBA minutes repeated the old speech of no rate hike and easy money at least till 2024 while the People’s Bank of China (PBOC) kept one-year and five-year benchmark rates unchanged, as expected, around 3.85% and 4.65% respectively.

Amid these plays, Wall Street benchmarks drop for the second consecutive day whereas the US 10-year Treasury yield recovered the previous day’s losses.

Moving on, Australia’s Westpac Leading Index for March, prior 0.02%, will be the first factor, ahead of the initial Retail Sales figures for March, expected 1.0% versus -0.8% previous readouts, to help forecast near-term AUD/USD moves. However, major attention should be given to the risk catalysts for a clear direction.

Technical analysis

Despite the latest pullback, AUD/USD stays above 50-day SMA level near 0.7720 on a daily closing, which in turn keeps buyers hopeful.