- AUD / USD gains some positive traction on Thursday and breaks a two-day losing streak.
- Risk appetite triggers some profit-taking around the safe-haven USD and supports the pair.
- The Fed’s Optimistic Expectationsthey should help limit losses around the USD and limit any further gains on the pair.
The pair AUD/USD maintains its upward tone during the first part of the European session and remains close to the daily highs just above the 0.7300 level.
The pair managed to gain some positive traction on Thursday and has now recovered a significant part of the previous day’s slide to lows of more than a month. The AUD / USD pair, for now, seems to have broken two consecutive days of losing streak and it has been supported by a combination of factors.
Following the recent move to the highest level since September 2020, the US dollar has seen a modest pullback. Risk appetite has prompted USD bulls to withdraw some gains and it has provided a good boost to the perceived riskier Australian dollar.
The intraday rally has not appeared to be affected by the disappointing Chinese manufacturing PMI for September, which has unexpectedly fallen into contraction territory for the first time since February 2020. However, the services sector has returned to expansion and has offered investors some relief.
In the meantime, Expectations that the Fed will start to reduce its asset purchases as early as November and raise interest rates in 2022 should act as a tailwind for the USD. This, in turn, warrants some caution before opening aggressive bullish positions around the AUD / USD pair.
Even from a technical perspective, the previous day’s sustained weakness below the 0.7220 area marked a bearish breakout and supports the prospects for a further decline. Therefore, any subsequent move to the upside could still be viewed as a selling opportunity and risks ending quickly.
Market participants are now awaiting macroeconomic releases from the United States, highlighting the final GDP figure and initial weekly jobless claims. This, coupled with testimony from Fed Chairman Jerome Powell and US bond yields, will influence the USD and could generate further momentum to the AUD / USD pair.
AUD / USD technical levels
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