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  • AUD/USD fails to hold on to recovery gains.
  • Recently mixed trade headlines, profit-booking ahead of data seem to exert the downside pressure.
  • Trade sentiment will keep the driver seat ahead of the US session that offers a busy economic calendar.

With the market’s wait for major positive trade news, not to mention the Aussie data, AUD/USD pulls back to 0.6785 amid initial Asian session on Wednesday.

While the broad strength of the US dollar (USD) keeps the Aussie pair under pressure, recently mixed headlines could also support the argument. The United States (US) President Donald Trump kept flashing green signals as to the trade deal with China despite saying “it’s got to be good”. Though, the South China Morning Post (SCMP) cites the US Commerce Department’s latest measures to protect the telecommunications networks and their supply chains from national security threats. The same indirectly takes clues from President Trump’s previous executive order that took a toll on Chinese companies.

Earlier, the pair manage to post a daily positive closing while mainly benefiting from the Reserve Bank of Australia (RBA) Governor’s comments. The RBA Governor initially hinted at the Quantitative Easing (QE) but later on stepped back by saying that QE would only be considered should the cash rate reach 0.25%.

The US dollar (USD) also pulled back on Tuesday after a set of mixed housing and manufacturing data, not to forget soft consumer sentiment figure, triggered a mild profit-booking after a few days of rising.

Market’s risk tone stays mostly positive with the US 10-year treasury yields taking rounds to 1.74% while S&P 500 Futures seesaw around 3,144.

Traders will now look forward to the third quarter (Q3) Construction Work Done from Australia. The housing data is expected to recover from -3.8% prior to -1.0%. Following the release, investors will have an absence of major data/events during the Asian session and the same highlights the US economic calendar that has some key data/events. Among them, the second version of the third quarter (Q3) Gross Domestic Product and October month Durable Goods Orders will be the key to watch.

Technical Analysis

While 10-day Simple Moving Average (SMA) level around 0.6800 acts as immediate resistance, 100-day SMA around 0.6830 will restrict near-term upside. Alternatively, mid-October lows near 0.6720 could be considered as adjacent support.