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  • Several factors helped the AUD/USD reverse its early fall to the 0.7185 region.
  • The easing of Omicron’s fears helped the riskier Aussie amid weak demand for the US dollar.
  • Fed’s hawkish forecast should limit dollar losses and limit the upside potential of the major currencies.

As the European session approaches, the AUD/USD price reversed its early decline, trading close to a one-month high in the 0.7215-20 region.

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On Thursday, the pair attracted new buying in the 0.7185 area and are now looking for a good recovery this week from the area. As economic recovery fears ease, more risky Aussies see an important tailwind. As a result, the AUD/USD pair received some support and reduced demand for the US dollar.

Investors were upbeat in light of reports showing that current vaccines may be more effective than expected in combating COVID-19. In addition, Omicron infection is associated with a lower risk of hospitalization and serious illness than Delta infection. The result of this was a new wave of risky stock-market trading that undermined the value of the safe dollar.

At least for now, the Fed’s high-profile outlook should help limit any meaningful fall in the US dollar and limit the upward potential of the AUD/USD. It is worth remembering that the Fed could raise interest rates at least three times next year, based on the scatter plot. In the midst of low liquidity ahead of the New Year holiday, traders may be deterred from new optimistic prices on the AUD/USD pair due to a mixed fundamental background.

The market is now eagerly awaiting the release of US economic reports, which include the Core PCE price index and durable goods orders later in the session. Together with the Coronavirus saga, this will boost demand for dollars and give some momentum to the AUD/USD pair. However, in the short term, traders will be guided by broader market risk sentiment to take advantage of opportunities.

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AUD/USD price technical analysis: Bulls eying at 0.7300

aud/usd price

The AUD/USD price stays strongly bullish after breaking the 200-period SMA on the 4-hour chart. The pair is eying the 0.7300 mark ahead of 0.7350. The average daily range is around 77%, which is higher than usual. It indicates that the price still has some room to further gain. However, the key is to stay above 0.7300.

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