• AUD/USD dropped to multi-week lows on Wednesday amid sustained USD buying.
• Some US dollar profit-taking from a 16-month peak helped ease the bearish pressure.
• Hawkish Fed expectations should act as a tailwind for the buck and cap the upside.

The AUD/USD pair managed to recover a major part of its early lost ground to six-week lows and was last seen trading with only modest intraday losses, around the 0.7300 mark.

The pair extended the previous day’s rejection slide from the 100-day SMA and witnessed some follow-through selling during the Asian session on Wednesday. The downward trajectory dragged the AUD/USD pair to the lowest level since October 6 and was sponsored by sustained US dollar buying interest.

The USD, however, struggled to capitalize on its early gains and witnessed some profit-taking near a 16-month peak. This, in turn, helped the bearish pressure surrounding the AUD/USD pair and led to a goodish bounce of around 35-40 pips from the 0.7260 area, though any meaningful recovery seems elusive.