- US dollar keeps falling amid pre-Fed nervousness.
- Souring Australia-China relations cap aussie’s upside.
- The US dollar trades broadly firmer ahead of the FOMC.
The US dollar is on a declining trend across the board so far this Wednesday, enabling AUD/USD to extend the Asian bounce briefly above the 0.7000 mark.
The bulls, however, remain jittery and take a breather amid rife Australia-China tensions, with both sides potentially putting their close trade relationship in jeopardy. At the press time, the major gains 0.30% to trade at 0.6985.
Australian Trade Minister S. Birmingham raised concerns over the economic outlook if Chinese students opted to stay away from the country’s universities.
China, recently, accused Australia against racial discrimination while the latter called for a global inquiry on China into the coronavirus origins.
Despite the pullback, the spot continues to draw support from the relentless US dollar selling across the board, as investors turn cautious ahead of the US Federal Reserve (Fed) monetary policy decision and economic projections.
Looking ahead, the US dollar flows will continue to determine the aussie’s price movement, especially if the Fed Chairman J. Powell suggests yield curve control, in light of the recent steepening of the yields after the stellar US NFP data.
AUD/USD technical levels to watch
A failed attempt above 0.7000 has again revived the sellers, with the immediate downside is seen 0.6933/30 (June 10 & 5 low) and 0.6900 (round figure). The upside targets are seen at 0.7041 (2020 highs) and 0.7112 (daily classic R2).
AUD/USD additional levels
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