- AUD / USD finds decent support near the 0.7100 level and makes a nice bounce on Tuesday.
- A rally in US equity futures weighs on the safe-haven USD and supports the pair’s upward move.
- The RBA’s pessimistic expectations and nervousness over the coronavirus could limit the pair’s strong gains.
The pair AUD/USD has moved higher and has reached the Daily highs around the 0.7140 region at the start of the European session. At the time of writing, The pair retreats slightly from the highs, but still remains positive around the 0.7130-25 region.
Once again, the pair has achieved find some support near the round 0.7100 level and it has regained some positive traction Tuesday amid a softer tone around the US dollar. A modest rally in S&P 500 futures has weighed on the safe-haven USD amid political uncertainty in the United States. This, in turn, has been seen as one of the key factors that has benefited higher perceived risk currencies such as the Australian dollar.
However, growing market concern that the continuous increase in new coronavirus cases could trigger new blocking measures and hamper global economic recovery has offered some support to the US dollar. Furthermore, the lack of progress in the US stimulus talks could prevent the bulls from positioning aggressively and limit any uncontrolled movement in the AUD / USD pair, at least for now.
In the meantime, rising expectations that the RBA will cut interest rates in November could do even more to limit the pair’s rise. Therefore, any subsequent upward movement could be seen as a selling opportunity. With that said, it will still be prudent to wait for a sustained break below the round level of 0.7100 before positioning for any other short-term bearish moves for the AUD / USD pair.
Market participants are now awaiting the US economic calendar, which highlights the publication of durable goods orders. Apart from this, the broader market risk sentiment will influence the USD price dynamics and could generate some significant opportunities around the AUD / USD pair.
Credits: Forex Street
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