“¢ The ongoing USD sell-off helps the pair to build on its recovery move.
“¢ Positive commodity prices remain supportive of the positive momentum.
“¢ Focus remains on the upcoming US-China trade talks/FOMC meeting minutes.
The AUD/USD pair continued scaling higher through the Asian session on Tuesday and jumped to over one-week high, above mid-0.7300s in the last hour.
The pair built on last week’s goodish rebound from the 0.7200 neighborhood, or 20-month lows, and continued gaining positive traction for the fourth consecutive session amid the prevalent US Dollar selling bias.
The US President Donald Trump criticized the Fed Chair Jerome Powell for raising interest rates and triggered a broad-based USD sell-off since the mid-US session on Monday as market participants now fear that the Fed might now be forced to slow its monetary policy tightening cycle.
Hence, Wednesday’s release of the latest FOMC meeting minutes and the Fed Chair Jerome Powell’s speech at the central bank symposium in Jackson Hole will play an important role in determining the greenback’s near-term trajectory.
The up-move seemed rather unaffected by the RBA meeting minutes, which conveyed a message that there is no strong case for a rate hike. Meanwhile, a positive tone around commodity space, especially copper and gold (Australia’s top exports), remained supportive of the strong bid tone around commodity-linked currencies, including the Aussie.
It, however, remains to be seen if the pair is able to build on the positive momentum as the focus remains on the highly anticipated US-China trade talks this week, which tends influence sentiment surrounding the China-proxy Australian Dollar.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the 0.7385-90 region (50-day SMA), above which the pair is likely to dart towards challenging the 0.7440-50 supply zone.
On the flip side, weakness back below 0.7335-30 zone now seems to find support near the 0.7300 handle, which if broken might turn the pair vulnerable to retest 0.7240 horizontal support.
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