AUD/USD recovery stalls ahead of 200-DMA, retreats from tops

   •  USD weighed down by Trump’s harsh trade tariffs.
   •  Rising bond yields/risk-off mood seemed to cap gains.

The AUD/USD pair struggled to build on overnight sharp recovery move and surrendered a part of its early gains, back closer to the very important 200-day SMA. 

The pair on Thursday rebounded sharply amid some renewed US Dollar selling bias after the US President Donald Trump announced to impose steep tariffs on imported steel and aluminium. The momentum extended through the Asian session on Friday, albeit lacked any strong follow-through.

A goodish pickup in the US Treasury bond yields, coupled with a fresh wave of global risk aversion trade, turned out to be key factors capping additional gains for higher-yielding/riskier currencies - like the Aussie. 

Meanwhile, the prevalent positive trading sentiment around commodity space, especially copper, might continue to lend some support and limit any sharp downside, at least for the time being. 

With the only scheduled release of Revised UoM Consumer Sentiment, the US economic docket lacks any major market-moving data and hence, the USD/US bond yield dynamics might continue to act as key determinants of the pair's momentum on the last trading day of the week.

Technical levels to watch

Sustained weakness back below mid-0.7700s would turn the pair vulnerable to once again head towards challenging the 0.7700 handle before eventually dropping to its next major support near the 0.7665-60 region.

On the upside, any meaningful up-move is likely to confront immediate resistance near the 0.7780-85 region (200-day SMA), above which the recovery could get extended towards 100-day SMA barrier near the 0.7820 area.