AUD / USD retreats from highs of 0.7185 with the USD bouncing

• AUD / USD cuts gains after hitting 0.7185 to test support at the 0.7150 area.
• The US dollar recovers from risk aversion as hopes for a US stimulus fade.
• The Aussie remains in an uptrend heading towards 0.7235 / 43 – Credit Suisse.

The Australian dollar’s recovery from Tuesday’s low of 0.7150 has been capped at 0.7185 during the early days of the US trading session and the pair has trimmed gains, falling back to the mid-range of 0.7100.

US dollar appreciates as stimulus hopes fade

The dollar has gained traction during the US session, fueled by its safe-haven status as market sentiment plummeted after US Treasury Secretary Steven Mnuchin crushed hopes of a COVID-19 stimulus agreement. Mnuchin says that the positions remain distant and that it would be difficult to reach an agreement before the elections.

This news has raised market concerns about the global economic impact of the second pandemic wave after Johnson & Johnson reported Tuesday that its study of the coronavirus had been halted, lowering hopes for a vaccine in the foreseeable future.

Major stock indices have reacted negatively to the news, and Wall Street extended the losses on Wednesday. In the currency market, the USD has bounced off its main rivals and especially against the risk-sensitive Australian dollar.

AUD / USD to resume uptrend pointing towards 0.7235 / 43 – Credit Suisse

Despite the recent correction, Credit Suisse’s currency analysis team expects the Australian dollar to extend its uptrend from late September lows against the US dollar: “Tuesday’s AUD / USD correction managed to stay above from the late September uptrend, currently at 0.7152, keeping the market in a range-limited environment. With the daily MACD momentum also heading higher, we maintain our bias for an eventual resumption of the central uptrend. ”