- AUD / USD catches some aggressive buying on Wednesday and breaks three days of losses.
- Optimism over the COVID-19 vaccine and hopes for fiscal stimulus in the US weigh heavily on the safe-haven USD.
- Technical buying above 0.7440 further contributes to the strong intraday positive momentum.
The pair AUD/USD has built on its strong positive intraday movement and has shot to the highest level since July 2018, around the region of 0.7475, during the European session on Wednesday.
In the context of the launch of a vaccine for COVID-19, optimism about progress on the additional US fiscal stimulus package has triggered a new global wave of risk appetite. This, in turn, has weighed heavily on the safe-haven US dollar and led to some aggressive money flows into the higher perceived risk Aussie.
Hopes for a US COVID-19 stimulus plan have been revived after the US Secretary of the Treasury, Steven Mnuchin, offered a $ 916 billion aid package to the Speaker of the House of Representatives, Nancy Pelosi. This, coupled with the likelihood of the first COVID-19 vaccine in the US, has provided a strong boost to investor sentiment.
On Tuesday, the U.S. Food and Drug Administration (FDA) raised no new concerns about the safety or efficacy of the Pfixer / BioNTech vaccine. This implies that The vaccine will be approved for use in the US soon. And, to a greater extent, it will offset growing market concerns about the continued rise in new coronavirus cases.
In the meantime, AUD / USD bulls seem unaffected by China’s rather unimpressive inflation figures, which tend to weigh on the Australian dollar. In fact, China’s headline CPI fell to – 0.5% yoy in November, compared to estimates that point to a reading of 0% and worse than a 0.5% increase recorded in the previous month.
Apart of this, The chances that some short-term stop orders have been triggered following the sustained move above the 0.7440 resistance zone have further contributed to the strong intraday momentum.. With the technical indicators still far from being in overbought territory, the AUD / USD appears poised to extend the rally to the key psychological level of 0.7500.
AUD / USD technical levels
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