AUD/USD posts tentative recovery, but rallies back above 0.7300 remain subject to being sold

• AUD/USD has rebounded slightly on Thursday after hitting six-week lows on Wednesday just above 0.7250.
• Profit-taking on recent shorts, positive reopening news and NZD strength are all likely helping.
• The pair’s near-term technical bias continues to look bearish and rallies above 0.7300 remain subject to being sold.

Technical buying followings it's run of recent losses, as well some positive Australian economic reopening headlines, have helped AUD/USD post a decent rebound thus far this Thursday. The pair hit six-week lows just above 0.7250 late on Wednesday but has since recovered back to the 0.7280s. That means AUD is currently trading with gains of about 0.2% on the day versus the US dollar. The head of Australian state Victoria announced on Thursday that most Covid-19 related restrictions would be lifted from midnight. Over the last few weeks, restrictions, which were the toughest in Australia’s most populous states New South Wales and Victoria, have been eased. This is expected to provide the economy with a boost in Q4.

AUD/USD may also be getting a boost from strength in its antipodean cousin the kiwi. NZD is the best performing G10 currency on the day, up 0.6% versus the buck, after a quarterly survey of business managers one-year inflation expectations rose to an 11-year high at 3.7% from 3.02% in Q3. Traders said the data boosts the odds that the RBNZ opts to go with a 50bps rate hike at its policy meeting next week. AUD and NZD are typically closely correlated.

But zooming out to look at AUD/USD’s short/medium-term prospects, the technicals continue to look bearish. AUD/USD has been falling within a descending trend channel since the end of October. At the start of the week, the pair tested and rejected resistance in the form of the top of the descending trend channel. Any recovery back to the north of the 0.7300 level remains subject to being sold. To the downside, bears will be targetting the September lows just under 0.7200.