AUD/USD moves back closer to session tops, just below mid-0.7000s

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  • AUD/USD managed to find decent support ahead of the 0.7000 mark amid softer USD.
  • A modest bounce in the equity markets further benefitted the perceived riskier aussie.
  • Dovish RBA expectations, coronavirus jitters might keep a lid on any meaningful upside.

The AUD/USD pair has recovered around 30-35 from intraday swing lows to the 0.7010 area and might now be headed towards the top end of its daily trading range.

The pair continued showing some resilience at lower levels and once again managed to attract some dip-buying in the vicinity of the key 0.7000 psychological mark. The US dollar remained on the defensive through the first half of the trading action on the last day of the week, which, in turn, was seen as a key factor lending some support to the AUD/USD pair.

The uncertainty over the outcome of the US presidential election held the USD bulls from placing fresh bets. This, coupled with a modest rebound in the US equity futures, undermined the greenback’s safe-haven status and benefitted the perceived riskier aussie. However, expectations that the RBA will cut interest rates in November might cap the upside for the AUD/USD pair.

Moreover, growing market worries about the economic fallout from the imposition of fresh restrictions to curb the second wave of COVID-19 infections should help limit any meaningful USD downfall. This makes it prudent to wait for some strong follow-through buying before confirming that the AUD/USD pair might have bottomed out and positioning for any further gains.

Moving ahead, market participants now look forward to the second-tier US economic releases – Core PCE Price Index, Chicago PMI and revised Michigan Consumer Sentiment Index. Apart from this, the broader market risk sentiment, will influence the USD price dynamics and provide some short-term trading impetus to the AUD/USD pair.

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