AUD/USD Edged Higher Above 0.6900 Mark Due to Risk-On Market Sentiment
Arslan Butt • 2 min read
During Friday’s early European trading hours, the AUD/USD currency pair stopped its previous bearish moves and hit the intra-day high above 0.6900 level from the 1-1/2-week low level mainly due to the fresh risk-on market sentiment which underpinned the perceived riskier Australian dollar and contributed to the currency pair’s gain. Additionally, the broad-based US dollar weakness in the wake of risk-on market sentiment also provided support to the currency pair.
AUD/USD is trading 0.6905 and consolidating in the range between 0.6800 and 0.6912. However, traders seem cautious to place any strong position due to the fears of a second wave of coronavirus outbreak and the possibility of renewed lockdowns to curb the spread.
At the USD front, the broad-based US dollar failed to maintain its early session’s gains and dropped at least for now due to the rebound in the US equity futures, which becomes one of the key factors supporting the currency pair’s gain higher. However, the fading hopes for a sharp, V-shaped recovery from the coronavirus pandemic and fears of a second wave of coronavirus outbreak will keep a lid on any additional gains in AUD/USD.
Meanwhile, the Fed Chair Powell indicated fears of further dark days on the jobs front and faded prospects of a V-shaped recovery, which became a key factor that prevented any further gains in the currency pair. Earlier in the day, the Aussie currency was weighed down by Australia’s June month Consumer Inflation Expectations, which weakened from 4.2% forecast to 3.3%.
Therefore, it will remain to see if the AUD/USD pair can capitalize on the move or if it runs into some fresh supply at higher levels. This makes it reasonable to wait for some follow-through buying before traders start positioning for the resumption of the pair’s recent strong bullish trend.
Daily Support and Resistance
Pivot Point 0.7005
Traders will keep their eyes on the release of the preliminary June Michigan Consumer Sentiment Index from the US. In addition, the broader market risk sentiment will likely provide some impetus and produce some short-term trades on the last day of the week. Let’s consider taking selling trades below 0.6908 level until the next support area of 0.68415 today, while bullish breakout of 0.6908 level can secure buying until it is 0.6950 today.