AUD/USD clings to gains, just below Monday’s near 4-month tops

Haresh Menghani FXStreet

• Declining US bond yields add to the prevalent USD selling bias.
• US-China trade truce remains supportive of the positive move.

The AUD/USD pair caught some fresh bids on Tuesday and remains within striking distance of near four-month tops set in the previous session.

The pair continued finding decent buying interest near previous swing high, now turned support, around the 0.7345 region, with bulls shrugging off a slight disappointment from Aussie current account deficit figures for the third quarter of 2018.

The positive move seemed rather unaffected by the latest RBA monetary policy update, wherein the central bank kept interest rates unchanged at a record low level of 1.5% and did little to alter market expectations of the interest rate lift off in 2020.

Meanwhile, the latest optimism over a US-China trade truce, coupled with a sharp fall in the US Treasury bond yields exerted some fresh downward pressure on the US Dollar and remained supportive of the strong bid tone surrounding the China-proxy Australian Dollar.

In absence of any major market moving economic releases from the US, the USD price dynamics might continue to act as an exclusive driver of the pair's momentum through Tuesday trading session.

Technical levels to watch

The 0.7395-0.7400 region might continue to act as an immediate resistance and is closely followed by the very important 200-day SMA, around the 0.7415-20 region. On the flip side, the 0.7350-45 region might continue to protect the immediate downside, which if broken might prompt some long-unwinding trade and drag the pair further towards the 0.7300 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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