- AUD / USD witnesses profit-taking on Friday amid short-term overbought conditions.
- A softer risk tone benefits the safe-haven US dollar and puts pressure on the pair.
- Optimism about COVID-19 vaccines, the Brexit deal, and US fiscal stimulus could limit the USD’s recovery.
The pair AUD/USD moves lower during the European session on Friday and falls back to the daily lows, around the 0.7585 / 90 region.
The pair has witnessed a pullback on the last trading day of the week and has returned a significant portion of the previous day’s strong gains to the highest level since June 2018. The pullback has lacked an obvious fundamental catalyst and could only be attributed to some profit taking amid short-term overbought conditions.
A slight deterioration in global risk sentiment, as shown by a softer tone in equity markets, has led to some hedging of shorts around the safe haven US dollar. This, in turn, has been seen as one of the key factors that have pushed away the perceived riskiest Aussie dollar cash flows and put pressure on the AUD / USD pair.
Having said that, progress on additional fiscal stimulus measures in the United States could limit any significant recovery for the USD. This, coupled with optimism about COVID-19 vaccine launches and hopes for a last-minute Brexit deal, could prevent USD bulls from opening aggressive positions and help limit the AUD / USD slide. .
Thus, the current corrective decline is likely to attract some buying at lower levels amid the absence of relevant market economic publications. In the meantime, broader market risk sentiment and US stimulus news could continue to weigh on the USD, which should help investors seize some short-term opportunities around AUD / USD.
AUD / USD technical levels
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