- A combination of factors assisted AUD/USD to edge higher for the second consecutive session.
- Optimism over a potential COVID-19 vaccine provided a modest lift to the perceived riskier aussie.
- Dovish Fed expectations continued weighing on the USD and remained supportive of the uptick.
The AUD/USD pair trimmed a part of its Asian session gains to multi-day tops, albeit has still managed to hold its neck above the 0.7300 round-figure mark.
The pair added to the previous session’s positive move and gained some follow-through traction on the first day of a new trading week. The uptick was supported by the upbeat market mood and a weaker tone surrounding the US dollar, though bulls lacked conviction.
The global risk sentiment got a minor boost from the latest optimism over an early rollout of coronavirus vaccines. This was evident from a positive move in the equity markets, which undermined the USD’s relative safe-haven status and benefitted the perceived riskier aussie.
The greenback was further pressured by growing speculations for additional monetary easing by the Fed amid concerns about the economic fallout from the imposition of new COVID-19 restrictions in several US states. This, in turn, remained supportive of the AUD/USD pair’s positive move.
Despite the supporting factors, the AUD/USD pair lacked any strong follow-through buying and remained capped below the 0.7340 supply zone. This makes it prudent to wait for a sustained move beyond the mentioned barrier before positioning for any further near-term appreciating move.
Market participants now look forward to the release of the flash version of the US Manufacturing and Services PMIs, due later during the early North American session. The data, along with the broader market risk sentiment, will influence the USD price dynamics and provide some trading impetus.
Technical levels to watch
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