“¢ Risk-off mood boosts USD relative safe-haven status against the Aussie.
“¢ US-China trade optimism might help limit deeper losses, at least for now.
“¢ Focus remains on the Fed Chair Jerome Powell’s semiannual testimony.
The AUD/USD pair held on to its weaker tone through the Asian session on Tuesday and is currently placed at the lower end of its daily trading range, just above mid-0.7100s.
The pair stalled its recent positive momentum, supported by optimism over US-China trade negotiations, and met with some fresh supply to snap two consecutive days of winning streak on Tuesday.
A fresh wave of risk-aversion trade, triggered by geopolitical tension in the Asian continent, was seen as one of the key factors benefitting the US Dollar’s relative safe-haven status against its Australian counterpart.
Apart from the prevalent risk-off mood, repositioning trade ahead of today’s key event risk – the Fed Chair Jerome Powell’s semiannual testimony before the Congress – further collaborated to the pair’s weakness.
In the first of a two-day appearance before lawmakers, Powell will testify before the Senate Banking Committee later on Tuesday and his comments will be closely scrutinized for the central bank’s view on monetary policy.
This coupled with a slew of important macro data, including Chinese PMI prints and the revised US Q4 GDP growth figures on Thursday, might further contribute towards determining the pair’s next leg of a directional move.
Technical levels to watch
Immediate support is pegged near the 0.7130 region, below which the pair might turn vulnerable to head back towards testing sub-0.7100 level. On the flip side, the 0.7175 region now seems to act as an immediate resistance, which if cleared might assist the pair to make a fresh attempt to reclaim the 0.7200 round figure mark.
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