AUD/USD hits 2.5-week highs

• Improved risk sentiment has powered AUD/USD to 2.5-week high in Asia.
• The fading US-China trade tensions and PBOC rate cut put a strong bid under risk assets.
• The Fed rate outlook is likely adding to the bullish tone around the AUD/USD pair.

The AUD/USD pair jumped to 0.7133 in Asia – the highest level since Dec. 20.

The Aussie dollar is likely benefitting from the risk-on action in the stocks. For instance, the S&P 500 futures are currently reporting 0.4 percent gains, having rallied 3.4 percent on Friday. Meanwhile, Japan’s Nikkei is reporting 2.8 percent gains.

Moreover, the risk appetite improved on Friday, after Washington and Beijing announced vice-ministerial level negotiations over trade issues. The meeting is scheduled to take place in Beijing this week.

Further, the People’s Bank of China (PBOC) lowered the reserve requirement ratio for large financial institutions by a total of one percentage point.

Also, Fed’s Powell, on Friday, signaled the central bank could pause interest-rate increases if the US economy weakened, strengthening the bid tone around the risk assets.

Notably, these developments could keep the equity market better bid. The Aussie, therefore, could rise further in the European and US session.

AUD/USD Technical Levels