The Australian Dollar retreated against the broadly firmer US Dollar following two solid trading days of gains. AUD/USD had a go at 0.65614 last night, just short of 0.6570 resistance, tumbling back to 0.64564 overnight before climbing to settle at 0.6490 at the New York close, a loss of 0.51%. Strong risk sentiment which has boosted the Aussie Battler has begun to wilt under the pressure of higher yields ahead of the US treasury auction.
The latest Commitment of Traders report (week ended 5 May) saw net speculative Aussie short bets trimmed to -AUD33,455 contracts from -AUD 37,741 the previous week. While the short AUD market positioning is a support for the Battler, the currency is vulnerable to bouts of risk aversion.
AUD/USD has immediate resistance at 0.6520 followed by 0.6560. Strong resistance lies at the 0.6600/20 area. Support for the Aussie Battler can be found at 0.6450 (overnight low, 0.64564) followed by 0.6420. Expect the AUD/USD pair to consolidate today with a likely range of 0.6430-0.6530. Prefer to sell rallies on the day.