Upbeat Australian Retail Sales assisted AUD/USD to regain positive traction

Upbeat Australian Retail Sales assisted AUD/USD to regain positive traction The AUD/USD pair maintained its bid tone through the early European session, albeit seemed struggling to capitalize on the move and remained below the 0.7200 mark. Following the previous day's turnaround from the mentioned handle, the AUD/USD pair attracted fresh buying on Tuesday and was supported by a combination of factors. The Australian dollar drew some support from upbeat domestic Retail Sales data, which recorded a stronger than expected growth for the second successive month in November. Adding to this, the country's trade balance data showed that imports jumped 6% during the reported month and reaffirmed strong domestic demand. On the other hand, the ongoing retracement slide in the US Treasury bond yields kept the US dollar bulls on the defensive. This was seen as another factor that provided an additional lift to the AUD/USD pair.

Despite the supporting factors, the uptick lacked bullish conviction, and the AUD/USD pair, so far, has struggled to make it through the 0.7200 mark. The prospects for a faster policy tightening by the Fed acted as a tailwind for the greenback, which, in turn, held back traders from placing aggressive bullish bets and kept a lid on any meaningful gains. It is worth mentioning that the money markets have fully priced in the possibility of an eventual Fed lift-off in March and anticipate four rate hikes in 2022. Hence, the focus will remain on Fed Chair Jerome Powell's nomination hearing later during the US session, which will be looked for fresh clues on the timing and pace of policy normalization. Apart from this, investors will also take cues from the release of the latest US consumer inflation figures on Wednesday. This will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the AUD/USD pair. In the meantime, the broader market risk sentiment might produce some short-term trading opportunities.