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  • AUD/USD declines from Intraday high following the Aussie central banker’s comments.
  • RBA’s Lowe repeated the central bank’s dovish statements published the previous day.
  • Market sentiment stays positive amid US stimulus developments, absence of retail rush.
  • US ADP Employment Change, ISM Services PMI will join risk catalyst for strong direction.

AUD/USD takes a U-turn from intraday top of 0.7620 towards 0.7600 after RBA Governor Philip Lowe sounds dovish in her speech, published early on Wednesday. In doing so, the aussie pair fizzles the early day recovery from the lowest level in five weeks, flashed on Tuesday amid broad US dollar strength RBA’s dovish comments.

While reiterating inflation fears and the need for the Quantitative Easing (QE), RBA Governor Lowe said, “do not expect to meet goals before 2024, possible it will be later than this.”

Read: RBA’s Lowe: No appatite for negative rates

Earlier in the day, Australia’s Building Permits rose past-15.0% YoY and 2.6% MoM figures to 22.8% and 10.9% respectively in December. Before that, Commonwealth Bank Services PMI eased from 55.8 expected and previous mark to 55.6.

Although RBA’s Lowe challenges the corrective pullback, risk-on mood, mainly backed by the US stimulus hopes, seems to favor the quote’s upside. Recently, US Treasury Secretary Janet Yellen quotes Congressional Budget Office (CBO) forecasts while stating the desperate need for the fiscal stimulus. It’s worth mentioning that policymakers in the Senate keep haggling over the much-awaited relief wherein Democrats are pushing for the budget resolution that will enable them to pass the relief package without opposition’s support.

Read: Market focussed back on the size of the Biden fiscal bonanza

Other than RBA’s Lowe and domestic data, China’s Caixin Services PMI for January also favored AUD/USD sellers despite crossing 51.1 expected to 52.00, versus 56.3 prior.

Elsewhere, the absence of market frenzy and strong New Zealand employment numbers, coupled with no major negatives from the coronavirus (COVID-19) and vaccine news also favor the risks.

Amid these plays, S&P 500 Futures mark 0.35% intraday gains while stocks in Australia and Japan are up 1.05% and 0.51% in that order.

Having witnessed the immediate impact of RBA Governor Lowe’s speech, AUD/USD traders will wait for the US data, while also responding to the key risk catalysts.

Read: ADP Employment Change January Preview: A return to hiring?

Technical analysis

Only if the AUD/USD manages to cross the one-week-old resistance line near 0.7620, it can regain the 0.7700 threshold, else 50-day SMA near 0.7610 and December 21 low near 0.7460 lures the sellers.