AUD/USD takes bull breather, rally in commodities and potential US fiscal deal favor continued ascent

• AUD/USD dips 0.10% after a three-day winning streak. 
• Copper, iron ore prices surge, favor continued gains in the AUD. 
• The US fiscal deal could come through before the year-end, adding to bullish tone. 

AUD/USD is trading marginally lower on the day near 0.7610 at press time, having printed a 31-month high of 0.7640 on Thursday. 

The bulls look to be taking a hiatus, having engineered a rise from 0.75 to 0.7640 in the previous three trading days. And while the 14-day Relative Strength Index (RSI) is signaling overbought conditions and potential for consolidation/pullback, the rally in commodities and improving prospects of the US fiscal stimulus deal suggest otherwise. 

Dalian iron ore futures are trading at a near-record high, while copper prices have jumped to an eight-year high. Australia is one of the biggest exporters of both iron ore and copper. As such, the rally in iron ore and copper tends to bode well for the AUD. 

Meanwhile, the path of least resistance for the US dollar appears to be on the downside, with an additional US fiscal stimulus deal in sight and expectations for global economic recovery on potential coronavirus vaccines. 

In a boost to a deal’s prospects, House Speaker Nancy Pelosi said she hopes to receive the final legislative text on the deal later on Thursday, according to Reuters. Meanwhile, President Trump tweeted Thursday that stimulus talks were looking good. The lawmakers are now expected to approve stimulus before the year-end. 

A potential pullback in the stock markets poses a risk to AUD/USD’s bullish outlook. 

Technical levels