AUD/USD hesitates around 0.7300with the USD on recovery

• AUD/USD retreats below 0.7300 after failure at 0.7335/40 resistance area.
• The aussie capitulates against broad US dollar strength.
• AUD/USD remains focused on 0.7345 – UOB.

The Australian dollar has failed, once again, at 0.7335/40 resistance area following a strong performance during Monday’s European trading session. The pair retreated from session highs at 0.7335 to find support at 0.7265 as the US dollar regained lost ground.

The aussie retreats against a stronger USD

The AUD appreciated on early trading, buoyed by the moderately positive market sentiment. News reporting that AstraZeneca’s COVID-19 vaccine is 90% efficient has eased concerns about the economic impact of the pandemic, which favoured “risky assets” like the AUD against the safe-haven USD.

The positive traction seen on the European trading time has been undermined by news that Trump’s administration is weighing further punitive measures against China, which is one of Australia’s largest trading partners.

Beyond that, the strong USD recovery triggered by the upbeat US Preliminary Markit Purchasing Manager’s Index survey has pulled the pair below 0.7300 to be negative on daily charts. The PMI has shown a stronger than expected performance in both the manufacturing and services sectors’, which has boosted confidence about the strength of the US economy.

AUD/USD remains focused on 0.7345 – UOB

From a technical point of view, the FX Analysis Team at UOB sees the aussie biased higher, with key resistance at 0.7345: “As highlighted, odds for further AUD strength would diminish unless AUD breaks the major resistance at 0.7345 soon. Looking ahead, a break of this rather strong level could potentially lead to a rapid rise towards 0.7380. On the downside, a break of 0.7245 (no change in ‘strong support’ level) would indicate that AUD is not ready to move higher just yet.”

Technical levels to watch