A strong pickup in the USD demand dragged AUD/USD lower for the second straight day. Worries about surging COVID-19 cases drove haven flows towards the safe-haven buck. A positive risk tone could lend support and limit losses for the perceived riskier aussie. The intraday USD buying picked up pace since the early European session and dragged the AUD/USD pair back closer to the daily low, around the 0.7215 region in the last hour.
Having touched an intraday high near the 0.7235 region, the AUD/USD pair met with a fresh supply on Wednesday and turned lower for the second successive day. The downtick was exclusively sponsored by resurgent US dollar demand, which drew some support from worries about the economic impact of the continuous surge in new COVID-19 cases.
Apart from this, the Fed's hawkish outlook, indicating at least three rate hikes next year, further underpinned the greenback. That said, a generally positive tone around the equity markets could hold back traders from placing aggressive bullish bets around the USD and extended some support to the perceived riskier aussie, at least for now.
Meanwhile, the AUD/USD pair, so far, has managed to hold its neck above the 0.7200 round-figure mark. This makes it prudent to wait for some follow-through selling before positioning for an extension of the overnight pullback from the highest level since November 2022. This, in turn, would suggest that the recent bounce from the YTD low has run its course.
Market participants now look forward to the US economic docket, featuring the second-tier releases of the November Goods Trade Balance, Wholesale Inventories and Pending Home Sales data. This, along with the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the AUD/USD pair.
