“¢ Receding domestic political jitters triggers the initial leg of goodish recovery.
“¢ Renewed USD weakness provides an additional boost and remains supportive.
“¢ Disappointing US durable goods orders data does little to ease the USD selling bias.
The AUD/USD pair continued gaining positive traction through the early North-American session and was now seen building on its momentum back above the 0.7300 handle.
The recent domestic political crisis ended on Friday after the ruling Liberal party voted the Australian Treasurer Scott Morrison as the new Prime Minister and provided a strong boost to the Australian Dollar.
The uptick was further supported by some fresh US Dollar selling bias, further aggravated by the PBoC’s decision to re-introduce the counter-cyclical factor in its Yuan fixing mechanism.
Meanwhile, today’s disappointing US durable goods orders data for the month of July and a downward revision of previous month’s reading did little to ease the prevailing bearish sentiment surrounding the greenback.
Traders even shrugged off hawkish comments by Cleveland President Loretta Mester, saying that gradual rate hike path seems appropriate as the economic momentum was more than expected and offers very compelling cases for the Fed action.
The pair has now recovered around 50% of its steep declines witnessed over the past two trading session. The market focus now shifts to the Fed Chair Jerome Powell‘s highly anticipated speech at the annual Economic Policy Symposium, in Jackson Hole.
Against the backdrop of the US President Donald Trump’s recent critical comments on the Fed’s policy tightening, Powell’s comments will be closely scrutinized over the central bank’s monetary policy outlook and might eventually provide some fresh directional impetus for the major.
Technical levels to watch
Any further up-move beyond the 0.7315-20 immediate resistance is likely to get extended towards the 0.7360 supply zone before the pair eventually aims towards reclaiming the 0.7400 handle.
On the flip side, the 0.7275-70 region now becomes an immediate support to defend, which if broken might turn the pair vulnerable to slide back towards 0.7240-35 support area ahead of the 0.7200 handle.
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