- AUD / USD is moving lower along with S&P 500 futures.
- The DXY index halts the decline early in the European session, awaiting further momentum.
- Possible end-of-month repositioning in the Aussie ahead of the RBA.
The pair AUD/USD extends the pullback from the highest levels since September, reached at 0.7408 during the Asian session on Monday, as the US dollar halts its declines across the board.
The worsening risk sentiment could be associated with the rally of the US dollar, while the latest slump in S&P 500 futures also puts downward pressure on the Aussie of higher perceived risk. Markets continue to assess expectations of economic recovery induced by the progress of a coronavirus vaccine.
Meanwhile, growing trade tensions between Australia and China also limit the rise of the Australian dollar. Australian Trade Minister Simon Birmingham said on Monday they are considering an appeal from the World Trade Organization (WTO) against China’s decision to impose tariffs on barley imports from Australia.
Investors are also getting wary ahead of Reserve Bank of Australia (RBA) Governor Phillip Lowe’s speech and the monetary policy decision expected on Tuesday. Also, it is noteworthy that Australia’s Q3 GDP report and US NFP data will be released later this week.
But nevertheless, AUD Buyers Hold Hope Amid Upbeat Official China Manufacturing and Services PMIs, which suggest that the economic recovery in the world’s second-largest economy is gaining ground. Keep in mind that China is Australia’s main export destination.
AUD / USD technical levels
“Unless it retraces below the 0.7345 / 40 area, where the highs are set between mid-September and November 17, the AUD / USD bulls can hold the July 2018 high around 0.7485 as a target.” , explains Anil Panchal, an analyst at FXStreet.