AUD / USD updates session highs, looking to extend momentum above 0.7100

• AUD / USD witnessed a short hedging move on Wednesday amid a sustained sell off of the USD.
• Hopes for US fiscal stimulus boosted investor sentiment and undermined the dollar as a safe haven.
• The RBA’s dovish expectations could prevent the bulls from making aggressive bets and limit strong gains.

The pair AUD/USD It updated the daily highs during the early North American session, and the bulls are now looking to take advantage of the momentum above 0.7100.

Growing confidence that US lawmakers can agree on a new coronavirus aid package boosted investor confidence. This, in turn, undermined the relative safe-haven status of the US dollar and helped reignite demand for currencies perceived as riskier, including the Australian dollar.

US President Donald Trump showed his willingness to accept a broader aid bill and raised hopes for a bipartisan deal on stimulus measures ahead of the Nov.3 election. The Speaker of the House of Representatives, Nancy Pelosi, and the Secretary of the Treasury, Steven Mnuchin, will continue the negotiations on Wednesday.

Despite the latest developments, investors remain skeptical about passing the legislation amid strong opposition within Trump’s own Republican Party. This was evident by a cautious mood in the equity markets, which could limit any wild rally for the AUD / USD pair.

Aside from this, raising bets that the RBA will cut interest rates in November could prevent bull traders from making aggressive bets. This makes it prudent to wait for a strong follow-up buy before positioning for any further appreciation moves for the AUD / USD pair.

From a technical perspective, the intraday positive movement stalled near the 200 hourly SMA. That being said, a sustained move further could trigger a further attack from a short hedging move and push the AUD / USD pair further towards the 0.7165-70 resistance zone amid the absence of relevant economic releases from the market.