AUD/USD trades with modest losses around mid-0.7200s, lacks follow-through

AUD/USD snapped two consecutive days of the winning streak amid a modest USD strength.
A generally positive risk tone helped limit any deeper losses for the perceived riskier aussie.
Investors now look forward to the release of US Durable Goods Orders for a fresh impetus.
The AUD/USD pair remained on the defensive through the early European session, albeit lacked any follow-through selling. The pair was last seen trading around mid-0.7200s, down over 0.10% for the day.

The pair struggled to capitalize on its weekly gains recorded over the past two trading sessions and edged lower during the first half of the trading action on Wednesday. A modest US dollar strength was seen as a key factor exerting some pressure on the AUD/USD pair, though the underlying bullish tone helped limit any further losses.
The overnight strong move up in the US Treasury bond yields helped the USD to stall its recent corrective fall from a nine-and-half-month high and regain some positive traction. Apart from this, expectations that the Fed could still begin rolling back its pandemic-era stimulus in 2021 extended some additional support to the greenback.

Meanwhile, the US Food and Drug Administration (FDA) granted full approval to the Pfizer/BioNTech COVID-19 vaccine in a move that could accelerate US inoculations. This, in turn, helped ease worries about the fast-spreading Delta variant of the coronavirus that clouded the economic recovery outlook and boosted investors’ confidence.

The risk-on impulse was evident from a generally positive tone around the equity markets, which acted as a tailwind for the perceived riskier aussie. Investors also seemed reluctant to place any aggressive bets ahead of the Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, warranting caution for bearish traders.

Hence, it will be prudent to wait for some follow-through selling before confirming that the recent bounce from the vicinity of the 0.7100 mark, or YTD lows, has run out of steam. Market participants now look forward to the release of US Durable Goods Orders, which might provide some impetus to the AUD/USD pair later during the early North American session.