- AUD / USD faces rejection once again around the 0.7300 level.
- The USD remains weaker amid appetite for risk, which underpins the Australian dollar.
- The problems between Australia and China limit the gains of the pair before the speech of Lowe, governor of the RBA.
The AUD/USD consolidate your two-day climb around the 0.7300 level, having failed a couple of attempts to regain this level at the beginning of the Asian session.
Despite the minor setback, sentiment around the higher yielding Aussie remains elevated for optimism about the coronavirus vaccine and the trade agreement in the Asia-Pacific region. Johnson & Johnson reported that it will experiment with the vaccine with 6,000 UK volunteers based on two doses in a phase 3 trial.
This has strengthened the euphoria around the vaccine, especially after the success of the Pfizer and Moderna trial last week. General market optimism has weighed on demand for the safe haven of the US dollar across the board, with the DXY dollar index falling near 92.50.
Further, optimism also comes from the ASEAN Summit, in which 15 Asia-Pacific economies signed a China-backed trade pact. The agreement moves toward multilateralism, which could help mitigate the crippling economic cost of the pandemic.
The Australian dollar has also benefited from a Chinese industrial production increase of 6.9% in October, pointing to a sustained recovery in Australia’s closest trading partner.
Looking ahead, it remains to be seen if the pair recovers the 0.7300 level, as growing trade tensions between Australia and China continue to weigh on investors’ minds. Additionally, the US dollar could regain its strength should the COVID statistics spook the markets once again.
Meanwhile, the immediate focus of attention now remains on the speech by RBA Governor Philip Lowe, which will be presented today at 08:40 GMT.
AUD / USD technical levels
“The first support level is 0.7200, followed by the 0.7120 price zone. A break below this region would expose the critical 0.7000 level. On the other hand, 0.7340 provides resistance, on the way to the yearly high of 0.7411, ”explains Valeria Bednarik, chief analyst at FXStreet.
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