“¢ A subdued USD price action helped reverse an early dip to 100-hour SMA.
“¢ Bulls seemed unaffected by weaker copper prices/positive US bond yields.
The AUD/USD pair quickly reversed an early European session dip and is currently placed at the top end of its daily trading range, just below mid-0.7100s.
With investors looking past today’s RBA meeting minutes, which turned out to be a rather non-event, the prevalent US Dollar selling bias, despite a modest uptick in the US Treasury bond yields, helped the pair to catch some fresh bids near 100-hour SMA support and turn positive for the third session in the previous four.
The up-move, however, seemed lacking strong conviction and remained capped below overnight swing high amid a weaker tone around copper prices, which tend to undermine demand for commodity-linked currencies – like the Aussie. Adding to this, concerns over a further escalation of the US-China trade tensions might further contribute towards capping any meaningful up-move for the China-proxy Australian Dollar.
Hence, it would be prudent to wait for a follow-through buying beyond mid-0.7100s before traders start positioning for any further near-term appreciating move. Market participants now look forward to scheduled speeches by San Francisco Fed President Mary Daly and RBA Assistant Governor Guy Debelle for some fresh impetus.
The key focus, however, will be on Wednesday’s important release of the latest FOMC meeting minutes, which might play an important role in driving the near-term sentiment surrounding the greenback and eventually provide some fresh directional impetus.
Technical levels to watch
A strong follow-through buying has the potential to continue lifting the pair further towards reclaiming the 0.7200 handle, with some intermediate resistance near the 0.7175-80 region. On the flip side, the 0.7110-0.7100 area might continue to protect the immediate downside, which if broken might turn the pair vulnerable to head back towards testing multi-month lows support near the 0.7050-40 region.
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