“¢ Positive US-China trade-related development provides a strong lift.
“¢ The prevalent risk-on mood/USD selling bias remains supportive.
The AUSD/USD pair seemed struggling to build on its weekly bullish gap and has retreated few pips from over three-month tops touched earlier today.
The pair opened with a bullish gap at the start of a new trading week and was supported by a positive outcome at the G20 talks in Argentina, wherein the US and China agreed not to impose additional trade tariffs for at least 90 days and attempt to bridge their differences via new trade talks.
Meanwhile, a ceasefire in the trade war between the world’s two largest economies prompted a fresh wave of global risk-aversion trade and further drove flows away from the US Dollar’s relative safe-haven status towards perceived riskier currencies – like the Australian Dollar.
Adding to this, a slightly better-than-expected Caixin Chinese manufacturing PMI provided an additional boost to the China-proxy Aussie and lifted the pair to an intraday high level of 0.7380, though failed to attract any strong follow-through buying interest.
The pair is now holding steady above mid-0.7300s as market participants now look forward to the release of US ISM manufacturing PMI for some fresh impetus. Ahead of the data, speeches by influential FOMC members might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
Any subsequent up-move now seems to lift the pair further beyond the 0.7400 handle towards testing the very important 200-day SMA resistance near the 0.7415-20 region. On the flip side, retracement back below 0.7340 horizontal zone now seems to prompt some long-unwinding trade and accelerate the slide further towards the 0.7300 round figure mark.
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