AUD/USD slides below mid-0.7000s, closer to weekly low ahead of US data/FOMC minutes

• AUD/USD came under renewed selling pressure on Wednesday amid resurgent USD demand.
• Recession fears continued weighing on investors’ sentiment and benefitted the safe-haven USD.
• Traders now eye US Durable Goods Orders for some impetus ahead of the FOMC meeting minutes.

The AUD/USD pair witnessed an intraday turnaround from the 0.7120 region on Wednesday and continued losing ground through the mid-European session. The downward trajectory dragged spot prices back closer to the weekly low, below mid-0.7000s, and was sponsored by resurgent US dollar demand.

In fact, the key USD Index staged a solid rebound from a nearly one-month low touched the previous day and was supported by growing concerns about softening global economic growth. The prospects for a more aggressive move by major central banks to constrain inflation, the Russia-Ukraine war and the latest COVID-19 outbreak in China have been fueling recession fears.

The worries continued weighing on investors' sentiment, which was evident from a generally weaker tone around the equity markets. This, in turn, helped revive demand for the safe-haven greenback and drove flows away from the perceived riskier aussie. Apart from this, a strong intraday USD uptick could further be attributed to some repositioning trade ahead of the FOMC minutes.

A 50 bps Fed rate hike move at the next two meetings is fully priced in and hence, market participants will look for clues about the possibility of a jumbo rate hike in June. This will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the AUD/USD pair. In the meantime, traders might take cues from the US Durable Goods Orders data.

Technical levels to watch