AUD/USD off lows, still weaker for second straight session

Selling pressure around commodity-linked currencies seems to have abated a bit, with the AUD/USD pair bouncing off few pips from one-month lows touched during early Asian session on Friday.

Currently hovering around 0.7560 region, the pair traded in negative territory for the second consecutive session and is headed for a steep weekly decline amid growing Fed rate-hike bets and tumbling commodity prices. 

Rising expectations for an imminent Fed rate-hike action continued boosting the US treasury bond yields on Thursday, which eventually underpinned the US Dollar demand and weighed heavily on higher-yielding currencies - like the Aussie. This coupled with a slump in commodity space further aggravated selling pressure around resource-linked currencies, including the Australian Dollar.

On Friday, a modest recovery in commodities, accompanied with a mild retracement in the bond yields, seems to have lent some support as market participants now look forward to speeches from various FOMC officials, including the Fed Chair Janet Yellen, which if reinforces hawkish stance might trigger a fresh leg of up-move for the greenback and turn the pair vulnerable to extend its ongoing depreciating move.

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Technical levels to watch

Bears would be eyeing for a break below 0.7540 immediate support, which if broken is likely to accelerate the slide towards an important moving averages (200 & 50-day SMAs) confluence support near 0.7525-20 region. A convincing break below this important support now seems to pave way for a test of sub-0.7500 level support near 0.7480-75 zone.

Meanwhile on the upside, any recovery above 0.7580 level now seems to confront resistance near 0.7610-15 region, which if cleared might trigger a short-covering bounce towards 0.7655-60 region.