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  • The prevalent USD selling bias helped gains some traction at lower levels.
  • US-China trade uncertainty is likely to cap gains for the China-proxy aussie.
  • Move above 100-DMA (0.6835 region) needed to confirm any further gains.

The AUD/USD pair jumped to fresh session tops in the last hour, albeit seemed struggling to extend the momentum further beyond the 0.6800 round-figure mark.
The pair managed to reverse an early dip back closer to the lower end of its weekly trading range, around the 0.6785 region and was now being supported by the prevalent weaker tone surrounding the US dollar.

Focus remains on trade developments

The greenback shrugged off a goodish bounce in the US Treasury bond yields and remained depressed on the back of FOMC minutes, which revealed that policymakers see downside risks to the economic outlook.
Apart from some USD weakness, the uptick lacked any obvious catalyst and lacked any strong bullish conviction amid persistent US-China trade uncertainty, which tends to undermine demand for the China-proxy aussie.
It is worth recalling that the passage of the Hong Kong Humans Right and Democracy Act bill on Tuesday drew strong objections from China and shattered hopes of a partial trade deal between the world’s two largest economies.
This coupled with deteriorating global risk sentiment, as depicted by a sea of red across equity markets, might further contribute towards capping any strong gains for perceived riskier currencies – like the Australian dollar.
Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond 100-day SMA barrier near the 0.6835 region, before positioning for any further near-term appreciating move for the major.
There isn’t any major market-moving economic data due for release on Thursday and hence, the incoming trade-related headlines might continue to play a key role in producing some short-term trading opportunities.

Technical levels to watch