AUD/USD bounces off one-week lows, finds some support near 0.7700 mark

AUD/USD extended the overnight retracement slide and edged lower for the second straight day.
Renewed coronavirus jitters, an uptick in the US bond yields benefitted the safe-haven greenback.
The downside remains cushioned amid reduced Fed rate hike bets, warranting caution for bears.
The AUD/USD pair remained on the defensive through the first half of the European session, albeit has managed to rebound few pips from one-week lows. The pair was last seen trading around the 0.7715-20 region, down just 0.5% for the day.

The pair extended the previous day’s sharp retracement slide of over 100-pips from the 0.7815 region, or one-month tops and witnessed some selling for the second consecutive session on Wednesday. Renewed fears about another dangerous wave of coronavirus infections in some countries continued weighing on investors’ sentiment. This, in turn, drove some haven flows towards the US dollar and exerted pressure on the perceived riskier aussie.
The greenback got an additional lift from a modest uptick in the US Treasury bond yields. That said, reduced bets for an earlier than expected Fed lift-off held the USD bulls from placing any aggressive bets and extended some support to the AUD/USD pair. Investors now seem convinced with the view that any spike in inflation is likely to be transitory and that the Fed will keep interest rates near zero levels for a longer period.

Meanwhile, the AUD/USD pair, so far, has managed to hold its neck above the 0.7700 round-figure mark, warranting some caution for bearish traders. Moreover, there isn’t any major market-moving economic data due for release from the US. This further makes it prudent to wait for some strong follow-through selling before confirming that the recent bounce from sub-0.7600 levels has run out of steam and positioning for any further weakness.