AUD/USD: 0.7300 remains a tough nut to crack ahead of RBA’s Lowe

AUD/USD consolidates its two-day advance below 0.7300, having failed a couple of attempts to recapture the latter earlier in the Asian session.

Despite the minor pullback, the sentiment around the higher-yielding aussie remains lifted by the optimism over the coronavirus vaccine and the ASEAN RCEP deal. Johnson & Johnson reported that it will experiment with the vaccine with 6,000 UK volunteers on a two-dose basis in a phase 3 trial.

This strengthened the euphoria around the vaccine, especially after Pfizer’s and Moderna’s trial success last week. The overall market optimism weighed on the safe-haven demand for the US dollar across the board, with the dollar index downed to near 92.50 levels.

Further, the optimism also came in from the ASEAN Summit, in which 15 Asia-pac economies signed the China-backed trade pact. The agreement moves towards multilateralism, which could help mitigate the crippling economic cost of the pandemic.  

The aussie also benefited from a rise in Chinese industrial production by 6.9% in October, pointing towards a sustained recovery in Australia’s closest trading partner.

Going forward, it remains to be seen if the spot recaptures the 0.7300 level, as mounting Australian-Sino trade tensions continue to weigh on the investors’ minds. Also, the US dollar could regain its footing should the covid stats spook markets once again.

Meanwhile, the immediate focus now remains on the RBA Governor Philip Lowe’s speech due today at 0840 GMT.

AUD/USD technical levels

“The first support level is 0.7200, followed by the 0.7120 price zone. A break below this last would expose the critical 0.7000 threshold. On the other hand, 0.7340 provides resistance, en route to the yearly high at 0.7411,” Valeria Bednarik, FXStreet’s Chief Analyst explained.

AUD/USD additional levels