AUD/USD bulls catch a breather at 10-week top above 0.6500

• AUD/USD consolidates Tuesday’s daily gains from the highest since March 10.
• Broad US dollar weakness helps the Aussie pair to overcome China’s trade-negative measures.
• US Treasury, Fed Chair sound mostly dull during their testimonies, President Trump pushes for economic reopen.
• Second-tier Aussie data, PBOC rate decision and trade headlines remain as the key.

AUD/USD extends pullback from the multi-day top while declining to 0.6530 at the start of Wednesday’s Asian session. Even so, the Aussie pair carries the previous day’s break above 100-day SMA, the first since late-January.

US Dollar remains depressed…

The US dollar index (DXY), a gauge of US dollar versus major currencies, dropped to a two-week low on Tuesday while extending its fall from the previous day. The greenback indicator might have suffered losses as the Fed Chair Jerome Powell and US Treasury Secretary Steve Mnuchin failed to please traders during their testimonies. Also contributing to the US currency’s weakness could be downbeat US data and escalating tension with China.

US President Donald Trump signaled to freeze the nation’s contribution to the World Health Organization (WHO) citing the institute as favoring China over virus outbreak investigation. The same got heavy criticism from the dragon nation, as expected. On a different page, US President Trump signs a deregulatory executive order to push further for the economic restart.

Aussie-China tussle intensifies…

Having announced 80% tariffs on Australian barley, the dragon nation made sure that the Aussie policymakers regret their support for virus spread investigation. Although China openly denies any such allegations, markets smell further punitive measures in the form of further hardships for Aussie wine, seafood, oatmeal, fruit and dairy, per Bloomberg.

While Australian diplomats earlier said to reach the World Trade Organization (WTO) to fight against the issue, nothing further on that note has arrived so far.

Elsewhere, global markets await further updates on the virus drug after Moderna’s upbeat statements propelled the risks at the start of the week.

Amid all these catalysts, US 10-year Treasury yields dropped five basis points to 0.691% whereas Wall Street also stepped back from the previous day’s run-up at the end of Tuesday.

Although there prevails no major data up for publishing during the Asian session, Australia’s Westpac Leading Index and Interest Rate decision from the People’s Bank of China (PBOC) will be the key to watch. While the Aussie figure may slip below -0.85% flashed in March, PBOC recently surprised markets with no change in its Medium-term Lending Facilities (MLF) rates and can keep the attitude today. That said, the Aussie pair stays mostly dependent on the qualitative catalysts amid a light calendar.

Technical analysis

Unless slipping back below 100-day SMA level of 0.6500, Aussie bulls keep targeting an ascending trend line from March 13, at 0.6665 now.