AUD / USD rises to three-day highs near 0.7380 but lacks continuation

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  • AUD / USD captures buying for the second day in a row and recovers further from yearly lows.
  • Risk appetite sentiment weighs on the safe-haven USD, benefiting the higher perceived risk AUD.
  • Covid-19 concerns could prevent bulls from opening aggressive positions and limiting the pair’s gains.

The pair AUD/USD has moved higher at the start of the European session on Thursday and has reached new three-day highs around the 0.7380 region.

The pair has gained some positive traction for the second day in a row on Thursday and is now looking to take advantage of the previous day’s solid bounce from below the 0.7300 level, the lowest since November 2020. A further improvement in global risk sentimentAs evidenced by a positive tone around equity markets, it has acted as a headwind for the safe-haven US dollar. This, in turn, has been seen as the only factor lending some support to the higher perceived risk Australian dollar.

That said, a combination of factors could prevent investors from opening aggressive bullish positions around the AUD / USD pair and limit any further gains. Investors follow concerned about the possible economic consequences of the prolonged blockades in Australia’s two most populous states, Sydney and Victoria. Concerns were further fueled by disappointing Australian retail sales figures on Wednesday, which fell 1.8% in June and posted the biggest drop in 2021.

Meanwhile, risk appetite in the markets could continue to push US Treasury yields higher. This should provide some support to the USD and help limit the rise for the AUD / USD pair. Therefore, it will be prudent to wait for a strong continuation buy before confirming that the pair has bottomed out in the short term and positioning for any significant bullish movements.

Market participants are now awaiting today’s US economic calendar, which includes the usual data for initial weekly jobless claims and existing home sales. This, coupled with US bond yields, could influence USD price dynamics and provide further boost to the AUD / USD pair. Investors will take more cues from the broader market risk sentiment to seize some short-term opportunities around the pair.

AUD / USD technical levels

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