AUD/USD defends gains despite worsening sentiment

Tuesday has brought with it some selling in the risky assets and stocks were seen lower heading into the US session. However, the AUDUSD pair has managed to erase its intraday losses and switched to a positive territory. At the last check, it was seen hovering at around 0.7150.

Sentiment worsened today as investors are still eyeing the virus situation – which has been deteriorating over the previous weeks. Moreover, new virus flare ups are emerging in Spain and some EU countries, which will most likely definitely kill this year’s holiday session.

The greenback has been dropping recently, which fueled the AUDUSD pair to 16-month highs. The Fed’s meeting is due this week and traders are betting on more easing and dovish statement.

Later in the day, the US consumer confidence gauge is expected to decline slightly to 94.0 from 98.1 previously, which might be a bit negative for stocks and positive for the US dollar.

As long as the Aussie remains above the psychological level of 0.70, the medium-term outlook seems bullish. The next target for bulls could be at 0.72.

On the other hand, should the Aussie start declining, the first notable support might be near 0.7070 before the mentioned 0.70 threshold.