AUD/USD came under renewed selling pressure on Wednesday
The AUD/USD pair witnessed an intraday turnaround from the 0.7120 region on Wednesday and continued losing ground through the European session. The downward trajectory dragged spot prices back closer to the weekly low, below mid-0.7000s, and was sponsored by resurgent US dollar demand. In fact, the key USD Index staged a solid rebound from a nearly one-month low touched the previous day and was supported by growing concerns about softening global economic growth. The prospects for a more aggressive move by major central banks to constrain inflation, the Russia-Ukraine war, and the latest COVID-19 outbreak in China have been fueling recession fears.
The worries continued weighing on investors' sentiment, which was evident from a generally weaker tone around the equity markets. This, in turn, helped revive demand for the safe-haven greenback and drove flows away from the perceived riskier aussie. Apart from this, a strong intraday USD uptick could further be attributed to some repositioning trade ahead of the FOMC minutes. A 50 bps Fed rate hike move at the next two meetings is fully priced in and hence, market participants will look for clues about the possibility of a jumbo rate hike in June. This will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the AUD/USD pair. In the meantime, traders might take cues from the US Durable Goods Orders data.