• AUD/USD witnessed some selling on Wednesday and moved further away from the YTD peak.
• The overnight pullback could be seen as a false breakout through an ascending trend channel.
• Dips towards the 0.7535-0.7530 area could be seen as a buying opportunity and remain limited.

The AUD/USD pair edged lower on Wednesday and retreated further from the highest level since June 2021, around the 0.7660 region touched the previous day. The pair remained on the defensive through the early North American session and was last seen flirting with the daily low, just above mid-0.7500s.

The risk-off impulse - as depicted by a sharp all across the global equity markets - acted as a headwind for the perceived riskier aussie. On the other hand, the blowout rally in the US Treasury bond yields underpinned the US dollar. This, in turn, exerted some downward pressure on the AUD/USD pair.

That said, the prospect for more Western sanctions on Ukraine continued lending support to commodity prices, which should help limit any deeper losses for the resources-linked Australian dollar. Apart from this, a hawkish RBA commentary on Tuesday warrants some caution for aggressive bearish traders.

From a technical perspective, the overnight sharp pullback could be seen as a false breakout through an upward sloping trend channel extending from the YTD low. That said, it will still be prudent to wait for some follow-through selling before confirming that the AUD/USD pair has formed a near-term top.

Moreover, technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory. Hence, any subsequent decline could attract some buying near the 0.7535-0.7530 area. This, in turn, should help limit the downside near the 0.7500 psychological mark.

On the flip side, the top end of the aforementioned channel, currently around the 0.7590 region, now seems to act as an immediate hurdle. Sustained strength beyond should allow bulls to aim back to reclaim the 0.7600 mark and push the AUD/USD pair back towards the YTD peak, around the 0.7660 area.

AUD/USD daily chart

Key levels to watch