- AUD / USD regains positive traction on Thursday amid new selling around the USD.
- Risk appetite weighs on the safe haven USD and benefits the higher perceived risk AUD.
- The optimistic Fed lean could act as a tailwind for the USD and limit the pair’s rise.
Intraday selling bias around USD has pushed the pair AUD / USD to new daily highs, around 0.7260 region, at the start of the European session on Thursday.
Following the fall of the post-FOMC retracement the day before from the 0.7300 region, AUD / USD has captured new purchases near the 0.7220 support area Thursday. This marks the second day in a row of positive movement and is due to the appearance of some selling around the US dollar.
In fact, the DXY dollar index has retreated from month-long highs touched the day before in reaction to an optimistic inclination amid the prevailing risk appetite. Global risk sentiment has risen after Evergrande Group agree to settle the interest payments on an internal bond.
This, in turn, has been seen as a key factor that has benefited the higher perceived risk Aussie, although any significant upward movement still seems elusive. The US central bank indicated that the moderation in the pace of asset purchases could soon be justified if economic progress continues broadly as expected.
Additionally, Fed Chairman Jerome Powell added that pandemic-era asset purchases could come to a complete halt by mid-2022. In addition to this, the so-called dot chart revealed a growing inclination to increase interest rates in 2022, what should continue to act as a tailwind for the USD.
Even from a technical perspective, the recent drop of the last three weeks has been along a bearish channel. This points to a well-established short-term downtrend and supports the prospects for further losses, justifying some caution for aggressive bulls.
Market participants are now awaiting the US economic calendar, with the releases of the initial weekly jobless claims and preliminary PMI figures for September. The data could influence the USD, which together with broader market risk sentiment should provide some boost to the AUD / USD pair.
Technical levels to observe