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  • AUD/USD prints another failure to probe 0.7000 threshold, pulls back from 0.6975.
  • Upbeat global PMIs, Trump administration’s U-turn on the US-China trade deal favor risk-on sentiment.
  • Easing of lockdown restrictions, hopes of further stimulus counter trade negative news from Global Times.
  • A lack of major data/events will keep the market’s focus on trade/virus updates.

AUD/USD stretches the retracement from a one-week high while declining to 0.6930 at the start of Wednesday’s Asian session. The Aussie pair earlier surged to 0.6975 but marked another reversal from the below-0.7000 area as traders look for fresh signals to extend the previous risk-on mood.

Phase-one regains market’s attention…

Tuesday’s ephemeral action over the US-China trade deal, backed by White House Adviser Peter Navarro’s comments, renewed the importance of trade factor between the world’s two largest economies. Despite the Trump administration’s clean-up on the issue, China’s Global Times flashes red signals for the future Sino-American trade relations. The development seems to weigh on the market’s earlier optimism, which in turn seems to stop the Aussie bulls. Other than the trade deal speculations, the surge in the US coronavirus (COVID-19) figures and a lack of major data/events also contribute to the AUD/USD pair’s latest pullback.

The quote’s earlier surge could be attributed to the market’s sigh of relief that the trade deal among the global powers is on track. Also favoring the optimism were mostly upbeat activity numbers from the key economies, including the US and Australia. Furthermore, updates on a $1.5 trillion infrastructure plan from US Democrats and easing of lockdown measures in the UK are some additional catalysts that portrayed the previous day’s upbeat market performance.

Against this backdrop, Wall Street managed to keep the gains while the US 10-year treasury yields rose 1.1 basis points (bps) to 0.715% by the end of Tuesday.

Looking forward, the pair traders may keep eyes on the qualitative catalysts for immediate impetus amid a light calendar. In doing so, the virus, trade headlines will be the keys to follow.

Technical analysis

Buyers remain hopeful to confront 0.7000 threshold, in search of refreshing the monthly high of 0.7075, unless the pair trades beyond 21-day EMA level around 0.6830/25.