“¢ Correcting USD helps gain positive traction for the second straight session.
“¢ Bullish copper prices provide an additional boost and remain supportive.
“¢ Traders now eye US economic data for some fresh short-term opportunities.
The AUD/USD pair caught some strong bids on Friday and might now be aiming to move back above the 0.7400 handle.
After an initial dip to 0.7335 area, the pair turned higher for the second straight session and has now recovered all of its Wednesday’s losses to 18-month lows on the back of some heavy US Dollar selling.
News that the EU leaders have reached an agreement on migration triggered a sharp rally in the shared currency. Against the backdrop of a downward revision of the US Q1 GDP growth figures, the latest development weighed on the USD and was eventually seen driving the pair higher.
Adding to this, a solid rebound in copper prices provided an additional boost to the commodity-linked Australian Dollar and further collaborated to the pair’s strong rally through the Asian session on Friday.
Meanwhile, a slight improvement in global risk sentiment, as depicted by positive tone across equity markets and reinforced by a goodish uptick in the US Treasury bond yields, remained supportive of the strong bid tone surrounding perceived riskier currencies – like the Aussie.
It would now be interesting to see if bulls are able to maintain their dominant position or the up-move is utilized as an opportunities to initiate fresh bearish positions amid the ongoing trade spat between the US and China, which has been one of the key factors weighing on the China-proxy Australian Dollar.
Moving ahead, today’s US economic docket, featuring the release of personal income spending data, the core PCE price index – the Fed’s preferred inflation gauge, followed by Chicago PMI and Revised UoM Consumer Sentiment index, will now be looked upon for some meaningful trading opportunities on the last trading of the week.
Technical levels to watch
On a sustained move beyond the 0.7400 handle, the pair is likely to aim towards challenging the 0.7440-45 supply zone before eventually darting towards reclaiming the key 0.7500 psychological mark.
On the flip side, the 0.7365 area now seems to protect the immediate downside, which if broken might turn the pair vulnerable to slide back towards 0.7335-30 support area en-route the 0.7300 handle.
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