- AUD/USD gained strong traction on Wednesday and broke out of a multi-day-old trading range.
- The risk-on mood undermined the safe-haven USD and benefitted the perceived riskier aussie.
- Technical buying above the previous YTD tops also contributed to the strong intraday move up.
The heavily offered tone surrounding the USD pushed the AUD/USD pair further beyond mid-0.7600s, or the highest level since June 2018 during the Asian session on Wednesday.
Growing bets on a strong global economic recovery in 2021 remained supportive of the prevalent upbeat market mood. This, in turn, continued weighing on the safe-haven US dollar and was seen as one of the key factors benefitting perceived riskier currencies, including the Australian dollar.
Investors quickly looked past a Senate delay in US stimulus checks and remained optimistic about the likelihood of additional financial aid. It is worth reporting that Senate Majority Leader Mitch McConnell on Tuesday blocked the measure to increase COVID-19 relief payments to $2,000.
Meanwhile, the US Treasury Secretary Steve Mnuchin announced that qualified Americans could begin receiving the direct stimulus payment of $600 from Tuesday night. This, along with expectations that President-elect Joe Biden will push for more support measures, undermined the greenback.
The momentum assisted the AUD/USD pair to break out of a three-day-old trading range and pushed it further beyond the previous swing high, around the 0.7640 region. Hence, the strong positive move could further be attributed to some technical buying amid year-end thin trading volumes.
Moving ahead, market participants now look forward to second-tier US economic data – Goods Trade Balance, Chicago PMI and Pending Home Sales – for some impetus. Apart from this, the broader market risk sentiment might influence the USD price dynamics and produce some short-term opportunities.
Technical levels to watch
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