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  • Australian dollar holds onto daily gains versus the US dollar, unchanged over the week.
  • Quiet session across financial markets the day after FOMC minutes and VP debate.

The AUD/USD rose to test daily highs during the American session near 0.7170 but it failed to break higher and pulled back. The retreat found support at 0.7145. Near the end of the day, it was trading at 0.7155, 20 pips above Wednesday’s close and at the same level it closed last week.

The decline from the top took place as the US dollar regained strength as equity prices in Wall Street lost momentum. The move was short-lived and the DXY went back to neutral territory after hitting a daily high at 93.82.

The AUD/USD is about to post the second daily gain in a row but is not fully recover for Tuesday’s slide when it tumbled after US President Trump cancelled stimulus talks with Democrats. Two days later, expectations about several stimulus measures are on the rise supporting market sentiment.

Economic data from the US showed a decline in jobless claims to the lowest since April (initial and continuing) but numbers still present a weak labor market. On Friday, during the Asian session, Australian data to be released includes Home Loans for August and the Reserve Bank of Australia will publish the Financial Stability Review. In the US, attention will likely focus on politics and stimulus talks.

Technical outlook

The AUD/USD continues to recover from levels under 0.7100 it reached earlier during the week. The recovery found resistance around 0.7170 that is the key resistance ahead.  A break higher would expose 0.7210 (last and current week high). On the flip side, a consolidation below 0.7145 would signal more weakness ahead; the next support stands at 0.7120 that protects the weekly low at 0.7095.

Technical levels