AUD/USD recovers modestly to 0.6530 area after Tuesday's drop

• US Dollar Index turns south on falling Treasury bond yields.
• Westpac Consumer Confidence in Australia came in worse than expected in March.
• Coming up: Consumer Price Index data from US.

The AUD/USD pair erased more than 100 pips on Tuesday and closed the day near the 0.6500 handle but didn't have a difficult time staging a recovery on Wednesday amid broad USD weakness. As of writing, the pair was trading at 0.6530, adding 0.4% on a daily basis.

With Trump administration failing to present the highly-anticipated economic response package to coronavirus on Tuesday, US Treasury bond yields fell sharply to weigh on the greenback. As of writing, the 10-year US T-bond yield was down 14% on the day and the US Dollar Index was erasing 0.38% at 96.12.

On the other hand, Westpac's Consumer Confidence Index in Australia slumped to -3.8% in March from +2.3% in February and fell short of the market estimate of -0.4%. However, other data from Australia showed that Home Loans and Investment Lending for Homes both rose more than expected in January to help the AUD stay resilient against its rivals.

Later in the day, the Consumer Price Index (CPI) data from the US will be looked upon for fresh impetus. More importantly, investors will be keeping a close eye on developments surrounding the US' fiscal stimulus plans. Commenting on the matter, "despite the crisis, political considerations will surely play a role in shaping the final package, with President Trump likely to focus on growth stimulus measures (tax cuts), and Democrats focused on relief measures for those who will be hardest hit,” said ABN AMRO analysts.

Technical levels to watch for