- AUD/USD attracted some dip-buying on Wednesday amid renewed USD selling bias.
- Concerns about surging COVID-19 cases in the US kept the USD bulls on the defensive.
- A softer risk tone might keep a lid on any runaway rally for the perceived riskier aussie.
The AUD/USD pair managed to rebound around 40 pips from intraday lows and refreshed daily tops, around the 0.7310 region during the early European session.
The pair attracted some dip-buying near the 0.7270 region on Thursday and for now, seems to have stalled its retracement slide from the 0.7340 supply zone. The goodish intraday bounce was exclusively sponsored by the prevalent selling bias surrounding the US dollar.
Concerns about the potential economic fallout from new coronavirus restrictions in several US states tempered the latest optimism around promising vaccine trials. This, in turn, kept the USD bulls on the defensive and was seen as a key factor driving the AUD/USD pair higher.
Meanwhile, COVID-19 jitters took its toll on the global risk sentiment, which was evident from a weaker trading sentiment around the equity markets. A softer risk tone might cap the upside for the perceived riskier Australian dollar and warrants caution for bulls.
This makes it prudent to wait for some strong follow-through buying, possibly beyond the 0.7340 supply zone, before traders start positioning for any further near-term appreciating move for the AUD/USD pair.
Market participants now look forward to the US housing market data – Building Permits and Housing Starts – for some impetus. This, along with developments surrounding the coronavirus saga and the broader market risk sentiment – will influence the USD price dynamics and produce some meaningful trading opportunities around the AUD/USD pair.
Technical levels to watch
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