AUD/USD surges through mid-0.6900s on Powell's prepared remarks

• Powell reiterates to act as appropriate to sustain economic growth.
• The US bond yields tumble in reaction to dovish sounding remarks.
• Broad-based USD weakness prompts some aggressive short-covering.

The AUD/USD pair rallied around 35-40 pips and spiked to fresh session tops, beyond mid-0.6900s in reaction to the Fed Chair Jerome Powell's dovish remarks.

In his prepared statement to be delivered at the semi-annual congressional testimony, reiterated that the central bank will act as appropriate to sustain the US economic growth and uncertainties since the June FOMC meeting continues to dim the economic outlook.

Powell further noted that the baseline outlook is for the US economic growth to remain solid, labor markets to stay strong and inflation to move back up to central bank's 2% target, though there is a risk that weak inflation will be persistent – more than the Fed currently anticipates.

The perceived dovish remarks revived hoped for an aggressive policy easing by the Fed, which was evident from a sharp intraday pullback in the US Treasury bond yields and exerted some downward pressure on the US Dollar, prompting some aggressive short-covering move around the major.

Moving ahead, the question and answer session might trigger a fresh bout of volatility and produce some meaningful trading opportunities ahead of the release of June FOMC meeting minutes, due later during the US trading session.

Technical levels to watch