AUD/USD refreshes session tops, looking to extend the momentum beyond 0.7100 mark

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  • AUD/USD witnessed some short-covering move on Wednesday amid sustained USD selling.
  • Hopes for US fiscal stimulus boosted investors confidence and undermined the safe-haven USD.
  • Dovish RBA expectations might hold bulls from placing aggressive bets and cap any strong gains.

The AUD/USD pair refreshed daily tops during the early North American session, with bulls now looking to build on the momentum further beyond the 0.7100 mark.

Growing confidence that US lawmakers can come to an agreement over a new coronavirus relief package boosted investors’ confidence. This, in turn, undermined the US dollar’s relative safe-haven status and helped revive demand for perceived riskier currencies, including the Australian dollar.

The US President Donald Trump showed a willingness to accept a larger aid bill and raised hopes for a bipartisan-deal on stimulus measures ahead of November 3 election. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin will continue negotiations on Wednesday.

Despite the latest developments, investors remain sceptic over the passage of the legislation amid strong opposition from within Trump’s own Republican Party. This was evident from a cautious mood around the equity markets, which might keep a lid on any runaway rally for the AUD/USD pair.

Apart from this, increasing bets that the RBA will cut interest rates in November might further hold bullish traders from placing any aggressive bets. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move for the AUD/USD pair.

From a technical perspective, the intraday positive move stalled near 200-hour SMA. That said, a sustained move beyond might trigger a fresh bout of a short-covering move and push the AUD/USD pair further towards the 0.7165-70 resistance zone amid absent relevant market moving economic releases.

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