AUD/USD jumps to the highest level since July 2018, 0.7500 mark back in sight

• AUD/USD caught some aggressive bids on Wednesday and snapped three days of losing streak.
• COVID-19 vaccine optimism, US fiscal stimulus hopes weighed heavily on the safe-haven USD.
• Technical buying above the 0.7440 further contributed to the strong intraday positive momentum.

The AUD/USD pair built on its strong intraday positive move and shot to the highest level since July 2018, around the 0.7470 region during the early European session.

Against the backdrop of the rollout of a COVID-19 vaccine, the optimism over the progress on additional US fiscal stimulus package triggered a fresh wave of the global risk-on trade. This, in turn, weighed heavily on the safe-haven US dollar and drove some aggressive flows towards perceived riskier aussie.

Hopes for a long-delayed COVID-19 stimulus plan before the end of the year revived after the US Treasury Secretary Steven Mnuchin offered a $916 billion aid package to House Speaker Nancy Pelosi. This, along with the likelihood of the first COVID-19 vaccine in the US, provided a strong boost to investors’ confidence.

The US Food and Drug Administration (FDA) on Tuesday that raised no new issues about the safety or efficacy of the Pfixer/BioNTech vaccine. This implied that the vaccine will be approved for use in the US soon and to a larger extent, offset growing market worries about the continuous surge in new coronavirus cases.

Meanwhile, the AUD/USD bulls seemed unaffected by rather unimpressive Chinese inflation figures, which tend to undermine the China-proxy Australian dollar. In fact, China’s headline CPI fell 0.5% YoY in November as compared to consensus estimates pointing to a flat reading and worse than a 0.5% rise recorded in the previous month.

Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond the 0.7440 resistance zone further contributed to the strong intraday momentum. With technical indicators still far from being in the overbought territory, the AUD/USD pair seems poised to climb further to the key 0.7500 psychological mark.

Technical levels to watch