AUD/USD keeps the red below 0.6900 post-US data, bears await break below 50-day SMA

• AUD/USD drops back closer to the monthly low amid strong follow-through USD buying.
• The upbeat US macro data reaffirms hawkish Fed expectations and boost the Greenback.
• The prevalent risk-off mood also benefits the buck and weighs on the risk-sensitive Aussie.

The AUD/USD pair maintains its heavily offered tone through the early North American session and drops back closer to the monthly low in reaction to the upbeat US macro data. The pair is currently trading around the 0.6885-0.6880 area, with bears now awaiting a sustained break below the 50-day SMA before placing fresh bets.

The US Census Bureau reported that monthly Retail Sales grew by 3% in January, beating estimates for a 1.8% by a big margin. Furthermore, core retail sales, excluding autos, jumped 2.3% during the reported month, up sharply from the 0.9% decline (revised higher) recorded in December. Separately, the New York Fed's Empire State Manufacturing Index also surpassed expectations and improved to -5.8 in February from -32.9 previous.

The data cemented bets for further policy tightening by the Fed and provides a fresh lift to the US Dollar, which, in turn, exerts downward pressure on the AUD/USD pair. Meanwhile, worries about economic headwinds stemming from rapidly rising borrowing costs take its toll on the global risk sentiment. This is evident from a sea of red across the equity markets and is seen as another factor weighing on the risk-sensitive Aussie.

From a technical perspective, the AUD/USD pair now seems to have confirmed a bearish breakdown through an upward-sloping trend-line extending from October 2022 swing low. Some follow-through selling below the 50-day SMA will reaffirm the negative bias. This should pave the way for an extension of the recent pullback from the highest level since June 2022, around the 0.7155-0.7160 area touched earlier this month.

Technical levels to watch