AUD/USD erases large portion of early gains, stays calm below 0.7200
- AUD/USD is having a tough time finding direction on Tuesday.
- US Dollar Index recovered modestly after dropping below 93.00.
- Consumer confidence in the US continued to deteriorate in August.
The AUD/USD pair rose toward 0.7200 during the European trading hours but lost its traction as the greenback started to gather strength during the American session. As of writing, the pair was up 0.15% on a daily basis at 0.7172.
DXY rebounds above 93.00 on surging US T-bond yields
Earlier in the day, the upbeat market mood on easing US-China tensions helped the risk-sensitive AUD find demand. Moreover, the US Dollar Index (DXY), which closed in the positive territory on Monday, dropped below 93.00 and helped the pair preserve its bullish momentum.
However, the sharp upsurge witnessed in the US Treasury bond yields helped the DXY stage a rebound and caused the pair to reverse its direction. At the moment, the 10-year US T-bond yield is up 6.6% on the day and the DXY is posting small daily losses at 93.19.
Earlier in the day, the data from the US showed that the Conference Board's Consumer Confidence Index slumped to 84.8 in August from 93 in July. Nevertheless, this reading had little to no impact on the USD's market valuation.
Commenting on the data, “Consumer Confidence is lower now than it was in April and May at the height of the lockdowns," noted Wells Fargo analysts. “While there is not a long enough time series to make a bullet-proof case, it appears that confidence lags the progress with the virus, at least to some extent."
Technical levels to watch for