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AUD / USD looks to test multi-year highs near 0.7740

  • AUD / USD extends gains above 0.7700 amid USD weakness.
  • Optimism about vaccines and the second round of elections in Georgia offsets rising concerns about covid.
  • A stronger yuan and higher S&P 500 futures support the Australian dollar.

He AUD/USD It is gradually approaching the 2020 highs of 0.7743, with the pair’s bulls tightening their grip ahead of the release of the US ISM Manufacturing PMI and the Georgia runoff election.

AUD was the best performing currency among the G10 currencies last year and it has started the year 2021 with a solid tone. Part of the recent rise in AUD / USD can be attributed to the current weakness of the US dollar, while the strengthening of the Chinese yuan also offers support to the bulls of the pair.

With the Chinese economic recovery gaining momentum and the prospects for an accommodative policy that the Fed is likely to maintain, it is weighing on the USD / CNY. The Chinese yuan today reached its highest level against the US dollar since June 2018 at 6.4303.

Meanwhile, AUD / USD also benefits from economic optimism driven by coronavirus vaccine despite key global economies battling rising covid and new lockdowns.

The optimistic momentum observed in commodities It also seems to bode well for the Australian dollar, a currency pegged to commodity prices. Gold hit two-month highs at $ 1,946, while copper nearly tested the critical $ 8,000 barrier on the London Metal Exchange (LME).

Markets too they hold out hope for a sweeping Democratic victory in Georgia’s Senate race, which will pave the way for additional fiscal support. This could be positive for higher-yielding assets, such as the Australian dollar.

Meanwhile, the pair will continue to receive support from the weak US dollar, as attention turns to the release of the US ISM manufacturing PMI for December.

AUD / USD technical levels

“An upward breakout of the 21-period SMA, now at 0.7704, will target recent highs around 0.7740 / 45, the highest levels since April 2018. Should the bulls break out of this region , the April 2018 high near 0.7815 will once again catch the market’s attention. Overall, AUD / USD remains in an uptrend unless the short-term support line is broken, “explains FXStreet analyst, Anil Panchal.

Additional AUD / USD levels

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