- AUD / USD spiked to the highest level since Sept. 2 amid renewed USD sell bias.
- The Fed’s dovish expectations, COVID-19 vaccine optimism undermined the safe-haven dollar.
- A modest recovery in US bond yields eased downward pressure from the USD and limited the upside.
The pair AUD/USD It quickly retraced around 30 pips from the daily highs, although it has still managed to hold on with decent intraday gains around the 0.7340 region.
The pair caught aggressive offers on Tuesday and jumped to the highest level since Sept. 2 amid the emergence of some new selling around the US dollar. Increased bets for additional monetary easing by the Fed in December continued to put some pressure on the dollar during the first half of trade action.
Meanwhile, prospects for an early launch of the vaccine for the highly contagious disease continued to support market optimism. This, in turn, further undermined the dollar’s safe haven demand and benefited the Australian dollar perceived as riskier, pushing the AUD / USD pair through the 0.7335-40 supply zone.
Despite the negative factors, the dollar managed to find some support at lower levels amid a modest rally in US Treasury yields A modest rebound in the USD appeared to be the only factor causing some Take profit around the AUD / USD pair, although the pullback lacked a strong following and appears limited.
Even from a technical perspective, Tuesday’s positive move confirmed a short-term bullish advance in a one-week trading range and could have set the stage for an extension of the upward trajectory. Therefore, any significant corrective decline could still be seen as a buying opportunity near 0.7300.
Moving forward, the US economic agenda, which includes the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index releases, will now be seen as a short-term trade boost. However, the key focus will be Wednesday’s release of the Minutes from the last FOMC policy meeting.
Technical levels
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