- The revival of demand for the safe-haven USD puts some pressure on the AUD / USD.
- A good bounce in the stock markets helps the pair stop its intraday decline.
- The hike appears limited as the focus remains on Wednesday’s FOMC decision.
The pair AUD/USD It has quickly recovered around 30 pips from the initial decline in the European session, near the 0.7670 level at more than a week’s lows. At time of writing, the pair is losing on the day. around the 0.7700 level.
A combination of factors has weighed on global risk sentiment and it has forced investors to take refuge in the safe-haven US dollar. This, in turn, has been seen as a key factor driving away cash flows from the perceived riskier Aussie during the first half of Tuesday’s trading action.
In the context of growing market concerns about the economic consequences of the coronavirus pandemic, doubts about the size and timing of the US stimulus have clouded market sentiment. In addition, the escalation of tensions between the United States and China in the South China Sea it has further affected investor sentiment.
It’s worth reporting that Republicans have raised objections to the high price of a proposed $ 1.9 trillion stimulus package. Additionally, Democratic Majority Leader Chuck Schumer has fueled uncertainty about the timing and said that a comprehensive agreement could take four to six weeks.
Despite the negative factors, the AUD / USD pair has stopped its intraday decline near the 0.7670-65 region and has now moved again near the 0.7700 region. A positive rally in European stock markets has limited the USD’s advance and helped the pair attract some buying.
However, it remains to be seen whether the bulls can capitalize on the move or prefer to stay on the sidelines ahead of this week’s key US events. The FOMC to announce its monetary policy decision on Wednesday and the preliminary fourth quarter GDP report is scheduled to be released on Thursday.
Meanwhile, Tuesday’s release of the Conference Board consumer confidence it could generate new momentum. Investors will follow the signs of broader market risk sentiment and developments around the coronavirus saga, which could influence USD price dynamics.
AUD / USD technical levels
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