- AUD/USD reversed an early dip and turned positive for the second straight session.
- The risk-on mood, a modest USD pullback remained supportive of the intraday uptick.
- The upside remains capped amid concerns over the economic fallout from coronavirus.
The AUD/USD pair rallied around 85 pips from the early swing lows and jumped to multi-day tops, around the 0.6365-70 region in the last hour.
A combination of factors assisted the pair to reverse the Asian session dip, rather attract some dip-buying near the 0.6280 support area and turn positive for the second consecutive session on Thursday.
A further improvement in the global risk sentiment, as depicted by a positive mood around the equity markets, extended some support to perceived riskier currencies, including the Australian dollar.
The risk-on mood dented the US dollar’s safe-haven status, which provided an additional boost to the pair and contributed to the pair’s goodish intraday positive move back closer to weekly tops.
The market sentiment remained well supported by the passage of another $484 billion US economic support package by the US Senate and some follow-through recovery in crude oil prices.
This coupled with possibilities of some intraday trading stops being triggered above 200-hour SMA seemed to be one of the key factors behind the latest leg of a sudden spike over the past hour or so.
Hence, it remains to be seen if the uptick is backed by any genuine buying or turns out to be a stop-run as investors remain concerned about the economic fallout from the coronavirus pandemic.
Adding to this, expectations that the world economy will remain weak, even after the lockdowns are eased, might continue to support the USD’s status as the global reserve currency and cap gains.
Moving ahead, market participants now look forward to the US economic docket – highlighting the release of flash Manufacturing PMI and Initial Weekly Jobless Claims – for some short-term impetus.
Technical levels to watch
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