- Some renewed USD weakness assisted AUD/USD to gain some traction on Thursday.
- The optimism over a potential COVID-19 vaccine undermined the safe-haven USD.
- Concerns over worsening US-China relations might keep a lid on any strong gains.
- Investors look forward to important US macro data for some meaningful impetus.
The AUD/USD pair quickly recovered around 35 pips from the Asian session lows and was last seen trading near the top end of its daily trading range, comfortably above the 0.6600 mark.
Following an early dip to the 0.6590 region, the pair managed to gain some traction and built on the previous day’s late rebound from 100-hour SMA support. The intraday uptick seemed rather unaffected by concerns about worsening US-China relations, rather took cues from some renewed US dollar selling bias.
The recent optimism over a potential COVID-19 vaccine and hopes of a sharp V-shaped recovery for the global economy remained supportive of the upbeat market mood. The risk-on environment undermined the greenback’s relative safe-haven demand and benefitted perceived riskier currencies, including the Australian dollar.
However, a further escalation in diplomatic tensions between the world’s two largest economies might keep a lid on any further gains for the AUD/USD pair. It is worth reporting that the US Secretary of State Mike Pompeo on Wednesday revoked Hong Kong’s special status and said that it was no longer autonomous from China.
Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move. Even from a technical perspective, the AUD/USD pair has repeatedly failed ahead of March monthly swing highs, further warranting some caution before placing any fresh bullish bets.
Moving ahead, market participants now look forward to a slew of important US macro data for some fresh impetus later during the early North American session. Thursday’s US economic docket highlights the release of the second estimate of Q1 GDP, Durable Goods Orders for April and the Initial Weekly Jobless Claims.
Technical levels to watch
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