What looked like a potential upside break yesterday ended up being a massive disappointment for AUD/USD buyers as they once again fail to clinch a daily break above the 0.7000 mark. The drop in US trading wasn't helped by a turnaround in market sentiment, with a slide in equities and the dollar picking up some bids late yesterday.

And given that setback, we are seeing a further drop in the pair by 0.7% to 0.6890 levels and just off its earlier low of 0.6878. As things stand, there are few factors that are adding to the case for a further retracement to the year's gains so far for the aussie.

  1. The failure to break above 0.7000 on the daily chart is a big technical setback, resulting in a drop back below the 100 and 200-hour moving averages (0.6967 and 0.6941 respectively) as well i.e. near-term bias more bearish now
  2. Risk sentiment is starting to lean towards the softer side as equities retreat, US futures also lower again today
  3. The Australian labour market report earlier today here suggests some slowing down in employment conditions

Those are some of the notable developments that is impacting the pair in the past few sessions.

From a technical perspective, buyers have to work to move back above the key near-term levels highlighted above first and foremost. Otherwise, there is scope for the latest retreat to move back towards its 200-day moving average at 0.6819.