AUD/USD Sideways Trading Continues – Traders Await a Breakout 

Posted Wednesday, August 26, 2020 by
Arslan Butt • 2 min read

The AUD/USD pair closed at 0.71935, after placing a high of 0.71975, and a low of 0.71499. Overall, the movement of the AUD/USD pair remained bullish throughout the day. The AUD/USD currency pair surged on Tuesday, amid an increased risk appetite in the market and the weakness of the broad-based US dollar. The easing of the mood surrounding the US-China issues helped the risk-sensitive Aussie to find demand in the market.


Moreover, the US Dollar Index (DXY), which closed in positive territory on Monday, dropped below the 93.0 level on Tuesday, supporting the bullish movement of the AUD/USD currency pair. The US Treasury bond yields for 10-year notes were up by 6.6% on the day.


On the data front, the House Price Index from the US for June rose to 0.9%, compared to the 0.3% that was forecast, supporting the US dollar. The Richmond Manufacturing Index also rose to 18, in contrast to the projected 10, providing support to the US dollar.


The Consumer Confidence from the Conference Board declined to 84.8, against the estimated 93.0, weighing on the US dollar. The New Home Sales increased to 901K, coming in higher than the anticipated 787K and bolstering the US dollar.


There was more positive data from the US side, but the highlighted data was negative, so the US dollar came under pressure, due to decreased consumer confidence. This, added to the improved risk sentiment, exerted further pressure on the US dollar, pushing the AUD/USD pair up on Tuesday.


The risk sentiment was supported by the rising optimism regarding the trade deal between the US and China. On Tuesday, the meeting between the two sides, which was originally scheduled for August 15, finally took place on Tuesday. Both parties confirmed their commitment towards the Phase 1 deal.


Despite ongoing tensions between the world’s two biggest economies in several areas, both nations showed a willingness to play their part in the agreement. This alleviated some of the uncertainty in the market and supported the risk sentiment.


The China-proxy Aussie gained traction after both nations toned down escalating tensions regarding the trade deal, hence the gains in the AUD/USD pair, which were further boosted by the latest statement by the WHO, in which a new initiative, named COVAX Facility, was announced. This initiative will enable the worldwide availability of vaccine doses, meaning that about 172 nations have participated in discussions with the vaccine manufacturers, to secure the delivery of approved and licensed vaccines throughout the world.


About nine vaccine candidates joined the initiative, and nine were undergoing an evaluation process, while the major producers were having discussions about joining the Facility. This also raised hopes and optimism in the market, helping the Aussie, which is perceived as risky, to gain traction and move upward on the chart. 

Daily Technical Levels

Support Resistance

0.7163 0.7212

0.7132 0.7230

0.7115 0.7261

Pivot point: 0.7181


The AUD/USD pair is trading at the 0.7170 level, holding above the support level of 0.7160. Above this level, the pair could remain bullish until the 0.7215 level. Continuation of an upward trend and violation of the 0.7215 resistance could open further buying room until 0.7275. Conversely, below 0.7137, the AUD/USD pair could slip until the 0.7190 level. Sideways trading is expected today. Good luck! 


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