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  • AUD/USD fades bounces off 0.7398 with less momentum.
  • S&P 500, Nasdaq refresh record high, gold and US dollar also recover amid cautious optimism.
  • US stimulus is more likely than Brexit deal, vaccine optimism battles Sino-American tussle, record-high US virus infections, death.
  • Aussie Westpac Consumer Confidence, China CPI should be watched closely, risk news will be the key.

Although the 0.7400 threshold defends AUD/USD buyers off-late, the quote can’t ignore the three-day downtrend while taking rounds to 0.7410 amid the early Wednesday morning in Asia. The aussie pair recently eased as global markets seem to overcome the coronavirus (COVID-19)-led pessimism by returning to their old favorites, namely gold, US dollar and equities.

Stimulus hopes versus US-China tussle…

The US policymakers are finally inching closer to the much-awaited COVID-19 aid package. Having initially signaled the total outlay of around $908 billion, the Republicans and Democrats are jostling with the details in the house. Recently, US Senate Democratic Leader Chuck Schumer said, “ongoing bipartisan negotiations are the best way forward for reaching a deal on coronavirus relief legislation.” On the other hand, House Republican Leader Mitch McConnell said he favors passing a basic coronavirus aid package without provisions on liability and state and local aid that are dividing lawmakers.

Also on the positive side were the public vaccinations in the UK as well as receding cases in the ex-US virus hotspots. The COVID-19 cases and the death toll both surged to record high on Tuesday.

Meanwhile, political tension between Washington and Beijing magnifies off-late after the US announced fresh sanctions on Chinese diplomats and Hong Kong police arrested a few more of the opposition members. Additionally weighing the risks could be the uncertainty relating to the Brexit and Aussie-China tussle.

Amid these plays, Wall Street benchmarks remain positive while the US 10-year Treasury yields struggle around 0.92% and prices of gold rose to a two-week high of $1,875.

While the risk catalysts are likely to keep the driver’s seat, Australia’s Westpac Consumer Confidence for December and China’s Consumer Price Index (CPI) and Producer Price Index (PPI) for November can offer immediate direction. While the Aussie consumer sentiment gauge was up 2.5% previously, inflation numbers from China are likely to recover and can offer a helping hand to AUD/USD buyers.

Technical analysis

A confluence of the 12-day-old ascending trend line and 10-day SMA highlights 0.7400/7395 as the strong short-term support. Alternatively, the 0.7450/55 area including Thursday’s top and August 2018 high seems to challenge AUD/USD buyers.