- AUD/USD found some support near the 0.7500 and stalled its corrective slide from multi-year tops.
- Hopes for more US fiscal stimulus kept the USD bulls on the defensive and extended some support.
- Bulls lacked conviction ahead of the latest FOMC monetary policy meeting, starting this Tuesday.
The AUD/USD pair managed to rebound around 20 pips from Asian session swing lows to three-day lows and was last seen trading around the 0.7525 region, nearly unchanged for the day.
The pair attracted some dip-buying ahead of the key 0.7500 psychological mark and for now, seems to have stalled its retracement slide from two-and-half-year tops set in the previous session. Growing market worries about the continuous surge in new coronavirus cases and the imposition of new restrictions overshadowed the optimism over the rollout of vaccines for the highly contagious disease. This, in turn, was seen as a key factor that exerted some pressure on the perceived riskier Australian dollar.
The aussie had a rather muted reaction to mostly in-line Chinese industrial output, which expanded for the eighth straight month in November. Meanwhile, a subdued US dollar price action extended some support to the AUD/USD pair and helped the downside, at least for the time being. In fact, the USD Index languished near the lowest level since April 2018 amid expectations for additional US fiscal stimulus measures.
Apart from this, investors now seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of a two-day FOMC monetary policy meeting, starting this Tuesday. Market expectations are growing that the Fed will ease its monetary policy further by expanding the bond-buying program. This could also be cited as another factor that contributed to the directionless move for the AUD/USD pair.
Market participants now look forward to the US economic docket – featuring the second-tier releases of Empire State Manufacturing Index and Industrial Production data – for some impetus. This, along with the US stimulus headlines and developments surrounding the coronavirus saga, might influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.
Technical levels to watch
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