- The risk-off mood seemed to benefit the USD and driving flows away from perceived riskier currencies.
- US-China trade optimism might continue to underpin China-proxy Aussie and help limit the downside.
- Investors now look forward to Tuesday’s RBA meeting minutes for some impetus ahead of the FOMC.
The USD buying picked up some pace during the early North-American session and dragged the AUD/USD pair to fresh session lows, around the 0.6855 region.
The pair failed to capitalize on its early uptick and once again, for the fourth consecutive session, failed ahead of the 0.6900 handle amid resurgent US Dollar demand. Against the back of escalating geopolitical tensions in the Middle East, the prevailing risk-off mood was seen benefitting the greenback’s relative safe-haven status and driving flows away from perceived riskier currencies – like the Aussie.
Resurgent USD demand weigh
Despite the pullback, the pair lacked any strong follow-through selling and remains well within a broader trading range held over the past one week or so. Growing optimism over the resumption of the US-China trade talks might continue to underpin demand for the China-proxy Australian Dollar and attract some dip-buying interest, eventually helping limit any meaningful downside for the major.
Investors might also be reluctant to place any aggressive bets, rather prefer to wait for a fresh catalyst from Tuesday’s release of minutes of the latest RBA monetary policy meeting. The key focus, however, will remain on Wednesday’s highly anticipated FOMC monetary policy decision, which will play a key role in determining the pair’s near-term trajectory ahead of the fresh round of US-China trade talks in early-October.
Technical levels to watch
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