AUD/USD rebounds from multi-month lows, lacks follow-through

• AUD/USD remained on the defensive through the Asian session on Tuesday.
• A turnaround in the global risk sentiment helped ease the bearish pressure.
• Investors look forward to the US macro releases for some trading impetus.

The AUD/USD pair reversed an early dip to over three-month lows and is currently placed near the top end of its daily trading range, around the 0.6760 region.

The pair added to its recent losses and lost some additional ground through the Asian session on Tuesday. The disappointing release of National Australia Bank's (NAB) Business Confidence, which fell to its lowest level since mid-2013 in December, was seen as a key factor weighing on the Australian dollar.

Aussie finds some support amid improving risk sentiment

The pair dropped to the lowest level since October 16 but showed some resilience below mid-0.6700s. A strong recovery in the global risk sentiment, coupled with a subdued US dollar price action extended some support to perceived riskier currencies and helped ease the bearish pressure surrounding the aussie.

However, heightened anxiety about the economic impact of a deadly new coronavirus in China might continue to undermine the China-proxy aussie. Adding to this, speculations that RBA may be forced to take aggressive easing measures might further contribute towards keeping a lid on any runaway rally for the major.

Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term recovery move. Market participants now look forward to the US Durable Goods Orders data and the Conference Board's Consumer Confidence index for some short-term trading impetus.

Technical levels to watch