Home AUD/USD surrenders early gains to over 1-week tops, focus remains on US-China trade talks
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AUD/USD surrenders early gains to over 1-week tops, focus remains on US-China trade talks

   “¢   The dollar buoyed by some haven-driven flows amid anxiousness ahead of key event risks.
   “¢   The upcoming US-China trade talks to influence sentiment around the China-proxy Aussie.
   “¢   FOMC monetary policy update will drive the USD and provide a fresh directional impetus.

The AUD/USD pair extended its steady intraday decline from over one-week tops and is currently placed at the lower end of its daily trading range, around the 0.7170 region.

The pair did attempt to build on Friday’s sharp short-covering bounce from three-week lows, albeit struggled to extend the positive momentum further beyond the 0.7200 handle, with a modest US Dollar uptick prompting some selling at higher levels.

Despite dovish Fed expectations, anxiousness ahead of this week’s key event risks boosted the greenback’s relative safe-haven appeal against its Australian counterpart and was seen as one of the key factors that kept a lid on any strong follow-through up-move for the major.

The upcoming high-level US-China trade talks will be looked upon for a possible resolution of disputes between the world’s two largest economies and play an important role in influencing sentiment around the China-proxy Australian Dollar.  

This coupled with the latest FOMC monetary policy update, expected to signal a pause in the recent tightening cycle, followed by the latest US monthly jobs report (NFP) would have a lasting effect on the buck and eventually provide a fresh directional impetus to the major.  

Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair has actually bottomed out in the near-term and traders positioning for any further near-term appreciating move.  

Technical levels to watch

A follow-through retracement below 0.7165 level is likely to accelerate the slide towards the 0.7140 support area before the pair heads back towards retesting the 0.7100 handle. On the flip side, the 0.7200 handle now becomes immediate resistance and is followed by the 0.7225-30 supply zone, above which the pair is likely to head towards testing the 0.7270 intermediate resistance en-route the 0.7300 round figure mark.
 

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