- AUD / USD manages to find decent support above the 0.7000 level amid a weaker USD.
- A modest rebound in equity markets further benefits the perceived riskier AUD.
- With the RBA’s pessimistic expectations, nervousness over the coronavirus could limit any significant rise in the pair.
The pair AUD/USD has rebounded to around 30-35 from daily lows in the 0.7010 region and now appears to be heading towards the upper end of its daily range, near the 0.7050 level.
The pair has continued to show some resistance at lower levels and once again has managed to attract some purchases near the key psychological level of 0.7000. The USD has been on the defensive during the first half of the price action on the last day of the week, which in turn has been seen as a key factor that has lent some support to the AUD / USD pair.
Uncertainty over the outcome of the US presidential election has prevented USD bulls from opening new positions. This, along with a modest rally in US equity index futures, has weighed on the safe-haven US dollar and benefited the perceived riskier AUD. However, expectations that the RBA will cut interest rates in November could limit the rise of the AUD / USD pair..
Further, growing market concerns about the economic consequences of the imposition of new restrictions To curb the second wave of COVID-19 infections they should help limit any significant decline in the USD. This makes it prudent to wait for some solid continuation buying before confirming that the AUD / USD pair could have bottomed out and positioned for further gains.
Market participants are now looking forward to second-tier economic releases in the US, notably the release of the core PCE price index, Chicago PMI, and the revised University of Michigan consumer sentiment index. Apart from this, the broader market risk sentiment will influence the USD price dynamics and could generate a short term momentum in the AUD / USD pair.
Credits: Forex Street
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