- AUD/USD regains some positive traction on Friday amid the prevalent USD selling bias.
- The uptick seemed rather unaffected by concerns about escalating US-China tensions.
- Trump’s reaction to China’ s security law for Hong Kong should provide a fresh impetus.
The AUD/USD pair climbed to session tops, around the 0.6660 region in the last hour, with bulls making a fresh attempt to extend the momentum beyond the very important 200-day SMA.
The pair reversed an early dip to the 0.6610 level and turned positive for the second straight session on Friday. The uptick was supported by the prevalent selling bias surrounding the US dollar and seemed rather unaffected by concerns about escalating diplomatic tensions between the United States and China.
The USD remained depressed on the back of Thursday's dismal US macro releases and was further pressured by a fresh leg down in the US Treasury bond yields. This comes on the back of the recent optimism over a potential COVID-19 vaccine, which continued weighing the greenback's safe-haven status.
Meanwhile, the AUD/USD bulls largely shrugged off the dragon nation's move to tighten control over the city of Hong Kong. It is worth reporting that China's parliament on Thursday endorsed a national security law for Hong Kong, fueling worries about a standoff between the world's two biggest economies.
The development dented investors' appetite for riskier assets and the same was evident from a weaker trading sentiment around the equity markets, though did little to prompt any selling around the perceived riskier Australian dollar.
Investors' seemed reluctant to place any aggressive bets, instead preferred to wait for the US President Donald Trump's news conference regarding China before placing any fresh directional bets.
Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the 0.6680-90 supply zone, to confirm a near-term bullish breakout. A convincing breakthrough might be seen as a fresh trigger for bullish traders and set the stage for a further near-term appreciating move for the AUD/USD pair.
Technical levels to watch
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