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AUD / USD consolidates near multi-week highs above 0.7350

  • AUD / USD remains trapped within a range during the European session on Thursday.
  • The lousy data from Australia limits any significant gains for the AUD.
  • The drop remains limited amid optimism about a vaccine for COVID-19.

The pair AUD / USD is moving within a tight range during the European session on Thursday, above the 0.7350 level and consolidating its recent gains to the highest level since early September.

The pair has been unable to capitalize on the previous day’s positive bounce of around 50 pips and has remained trapped within a tight range during the first half of trading action on Thursday. Australia’s Disappointing Private Capital Spending Post, which shows a contraction of 3% during the third quarter of 2020, has limited the rise of the AUD / USD pair.

But nevertheless, optimism about a possible vaccine for COVID-19 and clarity on the US political front have weighed on the safe-haven US dollar. This, along with the softer US macroeconomic releases on Wednesday, has weighed further on the dollar and has turned out to be one of the key factors that have offered some support to the AUD / USD pair, at least for the moment.

Data released Wednesday showed that the number of Americans filing for unemployment benefits unexpectedly rose to 778,000 during the week ending November 20. The pessimistic report indicates that the imposition of new restrictions was weighing on the recovery of the labor market and fueled concerns about the possible economic consequences of the increase in coronavirus cases.

Additionally, the minutes from the November 4-5 FOMC meeting revealed that lawmakers discussed a series of bond purchase options to support economic recovery. The minutes did little to dampen the prospects for further monetary easing by the Fed in December and further contributed to the prevailing selling bias around the dollar.

That said, investors seem reluctant to open aggressive positions amid relatively tight liquidity conditions due to the Thanksgiving holiday in the United States. This makes it prudent to wait for some solid continuation buying before investors start to position themselves for any further short-term bullish movement in the AUD / USD pair, possibly beyond the 0.7400 level.

AUD / USD technical levels

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