AUD/USD: Bulls need extra power to pierce 0.7200
- AUD/USD treads water between 0.7190 and 0.7198 after Tuesday’s run-up.
- US-China trade deal optimism helped markets overcome challenges to the American push for virus treatment/vaccine.
- Equities remain on the front foot, US 10-year treasury yields rise to the one-week top.
- Australia’s Construction Work Done decorates today’s calendar.
AUD/USD flirts with 0.7200 during the early Wednesday morning in Asia. The pair bucked two-day losing streak the previous day while bouncing off a short-term support line. Though, the following moves have been quite choppy within a 10-pip trading range by the end of the day. The lack of activity on the buyers’ side, initially favored by risk-positive news, could be traced from mostly dead news feeds and an absence of major data/events off-late.
Risk catalysts remain as the key…
Although US health official Dr. Anthony Fauci’s doubt over the Trump administration’s push for vaccine/treatment challenged the pair’s initial run-up, news that the US and China had “constructive” talk over the phase-one trade deal boosted the market sentiment afterward.
The upbeat mood helped S&P 500 and Nasdaq to flash the record high closing for Tuesday whereas the US 10-year Treasury yields gained 4.2 basis points to 0.688% by the end of Tuesday’s North American session.
While the positive news helped the quote overcome the previous two-day declines and challenge 0.7200, its additional upside lingers amid a lack of major push and mixed US data. The US New Home Sales hit the highest since December 2006 while Consumer confidence tumbled to its lowest level in six years.
Moving on, the pair traders await Australia’s second quarter (Q2) Construction Work Done, expected -5.8% versus -1.0% prior. Westpac holds a bearish view for the data considering the coronavirus (COVID-19) side-effects as the bank says, “Westpac and the market expect construction work in Q2 to exhibit broad-based weakness across the private sector, respectively forecasting declines of -3.4% and -7.0% after Q1’s -1.0%.”
Hence, the AUD/USD pair may trim its latest losses should the data disappoint. Though, risk catalysts may keep the quote on the positive side unless any major negative surprise erupts. It should also be noted that the US Durable Goods Orders, forecast 4.3% versus 7.6% revised prior, will be the key to watch in the American session.
Technical analysis
The pair’s sustained bounce off the monthly support line, currently around 0.7150, enables the bulls to aim for August 07 top near 0.7240. Though, a clear break beyond 0.7200 becomes necessary. Meanwhile, a downside break of 0.7150 can attack 0.7100 and the monthly low of 0.7075 but 0.7065/60 area including June month’s top and July 24 low will restrict the quote’s additional downside.