AUD/USD rebound eyes 0.6945 hurdle on strong Australia Retail Sales, Fed’s Powell in focus

• AUD/USD picks up bids to extend corrective pullback from intraday low.
• Australia Retail Sales rose past expectations to reprint 0.9% growth for May.
• Sluggish sentiment challenge recovery moves ahead of the key data/events.
• Powell needs to defend hawkish expectations from the Fed to keep USD bulls happy.

AUD/USD bounces off intraday low to snap a two-day downtrend on upbeat prints of Australia Retail Sales during Wednesday’s Asian session. That said, the Aussie pair takes the bids to 0.6915 by the press time. It’s worth noting that the challenges to sentiment and anxiety ahead of the week’s key data/events probe the buyers.

Australia Retail Sales reprints 0.9% MoM growth, versus the market consensus of 0.4%, for May. The data rebuffs challenges for the Reserve Bank of Australia’s (RBA) rate hikes with the heavy run-up, which in turn propels the AUD/USD prices of late.

However, fears surrounding global recession and the increasing inflation woes weigh on the AUD/USD, mainly due to the pair’s risk barometer status. While portraying the mood, the S&P 500 Futures struggle for clear directions after heavy losses on Wall Street. Further, the US 10-year Treasury yields drop for the second consecutive day, to 3.17% by the press time.

The Western sanctions on Russia and tough conditions for China at the North Atlantic Treaty Organization (NATO) meeting appear to exert additional downside pressure on the market sentiment, as well as on the AUD/USD prices.

On Tuesday, upbeat prints of one-year US consumer inflation expectations joined hawkish Fedspeak to renew the fears of faster Fed rate hikes, which in turn drowned the quote. However, headlines suggesting easing travel restrictions in China and likely Sino-American trade talks appear to have tamed the bearish bias previously.

Moving on, the US Core Personal Consumption Expenditure (PCE) for Q1 2022, expected to remain unchanged at 5.1%, will be important. On the same line will be the final readings of the US Q1 GDP, which is likely to confirm a 1.5% Annualized contraction. Above all, the central bankers’ discussions at the ECB Forum will be the key for the market players to watch for clear directions.

Technical analysis

A two-week-old support line precedes the ascending trend line from May 12, respectively around 0.6875 and 0.6860, to challenge the AUD/USD pair’s short-term downside. That said, the 10-DMA restricts immediate AUD/USD upside to around 0.6945.