- Trump back paddles on measures to be taken against Chinese investment in tech companies.
- Market sentiment improves on easing concerns over a harsh trade conflict.
- US Dollar Index stays above mid-94s.
The AUD/USD pair staged a 40-pip recovery in the last minutes and rose above the 0.74 mark after the statement released by the White House helped the market sentiment improve. As of writing, the pair was virtually unchanged on the day at 0.7395.
A senior Trump administration official said that President Trump decided against invoking national emergency law on China and added that the investment environment in the U.S. would remain open. Meanwhile, the White House published a press release highlighting that the administration would modify U.S. export controls to strengthen them if commerce department review finds that necessary.
Markets reacted positively to these headlines and the risk-sensitive aussie took advantage of the risk-on mood. However, the greenback also gathered strength on the back of recovering T-bond yields and made it difficult for the pair to extend its upside.
Ahead of the trade balance and durable goods orders data from the United States, the US Dollar Index was up 0.25% at 94.60. Major equity indexes in the United States, which recorded heavy losses on Monday on trade concerns, are likely to open higher and the greenback’s valuation could continue to drive the pair’s price action.
Technical outlook
The initial support for the pair aligns at 0.7340 (Jun. 21 low) ahead of 0.7300 (psychological level) and 0.7225 (Dec. 21, 2016, low). On the upside, resistances align at 0.7440 (Jun. 24 high), 0.7500 (psychological level) and 0.7570 (Jun. 1 high).
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