AUD/USD recovers further from YTD lows, holds comfortably above 0.7200 mark

• AUD/USD gained follow-through traction on Tuesday and moved further away from YTD lows.
• A generally positive risk tone benefitted the perceived riskier aussie amid a weaker greenback.
• The upside seems limited ahead of Fed Chair Powell’s speech at the Jackson Hole Symposium.

The AUD/USD pair maintained its bid tone through the early European session and was last seen trading near three-day tops, around the 0.7230-35 region.

The pair built on the previous day's solid bounce from the vicinity of YTD lows, around the 0.7100 mark and gain some follow-through traction for the second consecutive session on Tuesday. The risk-on impulse, along with the prevalent US dollar selling bias turned out to be key factors that provided a modest lift to the AUD/USD pair.

Investors drew comfort after the US Food and Drug Administration (FDA) granted full approval to the Pfizer/BioNTech COVID-19 vaccine. This was evident from a generally positive tone around the equity markets, which, in turn, undermined demand for the safe-haven greenback and acted as a tailwind for the perceived riskier aussie.

Meanwhile, worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery eased fears about an imminent tapering of asset purchases by the Fed. This was seen as another factor that contributed to the USD's ongoing retracement slide from a nine-and-half-month high touched last Friday.

The USD bulls failed to gain any respite from a modest uptick in the US Treasury bond yields. That said, investors might refrain from placing fresh USD bearish bets ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium. This warrants some caution before positioning for any further appreciating move for the AUD/USD pair.

Market participants now look forward to the US economic docket, featuring the second-tier releases of New Home Sales and Richmond Manufacturing Index. The data might do little to provide any meaningful impetus, though the broader market risk sentiment might influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.

Technical levels to watch