- A fresh wave of global risk-on mood triggers the initial leg of recovery.
- Trump’s positive trade-related comments provide an additional boost.
The AUD/USD pair built on its steady intraday recovery from multi-month lows and spiked to fresh session tops, around the 0.6865-70 region in the last hour.
The ECB President Mario Draghi’s dovish remarks in Sintra earlier this Tuesday led to an intraday turnaround in the global risk sentiment, which extended some support to perceived riskier currencies – like the Aussie and led the initial leg of the rebound.
The recovery move picked up the pace during the early North-American session in reaction to some renewed trade optimism after the US President Donald Trump said that he will have an extended meeting with his Chinese counterpart at the G20 summit.
This was followed by Chinese state media report that President Xi agrees to talk with Trump next week, which raised prospects for a possible resolution of the prolonged US-China trade disputes and provided a strong lift to the China-proxy Australian Dollar.
Adding to this, possibilities of some short-term trading stops being triggered on a sustained break through a one-week-old descending trend-channel formation on hourly charts seems have further aggravated move, helping the pair to snap four consecutive days of losing streak.
However, it would be prudent to wait for strong follow-through recovery to see if the up-move is actually backed by some genuine buying or is solely led by some short-covering as the focus now shifts to Wednesday’s FOMC monetary policy decision.
Technical levels to watch
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