AUD/USD bears flirt with 0.6900 amid recession woes, Aussie Retail Sales, Fed’s Powell eyed

• AUD/USD holds lower grounds at weekly low, stays pressured during three-day downtrend.
• Sour sentiment weigh on the risk barometer pair, updates concerning China put a floor under the prices.
• Australia Retail Sales for May, central bankers’ panel discussion at the ECB Forum will be important for fresh impulse.

AUD/USD remains depressed around 0.6900, after a two-day downtrend, as traders await key Aussie data during Wednesday’s Asian session. That said, the risk barometer pair refreshed its weekly high before closing in the red for the second consecutive day on Tuesday.

Headlines surrounding China’s easing of quarantine rules for travelers joined mixed concerns to favor the AUD/USD pair in refreshing the weekly top around 0.6965 the previous day. However, fresh fears of recession joined the market’s anxiety ahead of the key data/events to weigh on the quote afterward.

That said, “China will halve to seven days its COVID-19 quarantine period for visitors from overseas, with a further three days spent at home, health authorities said on Tuesday,” per Reuters.

On the other hand, the US Conference Board (CB) Consumer Confidence Index dropped for the second consecutive month in June, to 98.7 versus 100.0 expected and 103.2 in May. In doing so, the widely followed consumer sentiment gauge dropped to the lowest level since February 2021. Further details revealed that the one-year consumer inflation rate expectations climbed to 8% from May's revised print of 7.5%, which in turn renewed hawkish hopes from the Fed and propelled the USD. It should be noted that the US trade deficit dropped to the lowest in a year, to $104.3 billion, per the latest release for May.

While portraying the mood, the US 10-year Treasury yields snapped a two-day uptrend whereas Wall Street closed in the red. The S&P 500 Futures, however, print mild gains and it seems to probe the AUD/USD bears of late.

Moving on, the flash readings for Australia’s Retail Sales for May, expected 0.4% versus 0.9%, could direct immediate AUD/USD moves amid fears of receding hawkish bets on the Reserve Bank of Australia (RBA) rate hikes. Following that, the US Core Personal Consumption Expenditure (PCE) for Q1 2022, expected to remain unchanged at 5.1%, will precede the central bankers’ discussions at the ECB Forum to offer important insights.

Technical analysis

The 10-DMA restricts immediate AUD/USD upside to around 0.6945. However, a two-week-old support line precedes the ascending trend line from May 12, respectively around 0.6875 and 0.6860, to challenge the pair’s short-term downside.