AUD/USD clings to modest gains above 0.7300 mark, focus remains on FOMC

The AUD/USD pair edged higher through the early European session and was last seen hovering near the top end of its daily trading range, around the 0.7315 region.

Following the previous day's pullback of around 40-45 pips from near two-week tops and a subsequent dip to the 0.7285 region on Wednesday, the pair regained traction and turned positive for the fourth consecutive session.

The global risk sentiment remained well supported by the latest optimism over a potential COVID-19 vaccine. The risk-on mood undermined the US dollar's safe-haven status and benefitted the perceived riskier Australian dollar.

Meanwhile, the upside is likely to remain limited, at least for the time being, as investors might refrain from placing any aggressive bullish bets ahead of the highly anticipated FOMC monetary policy decision later this Wednesday.

This makes it prudent to wait for some strong follow-through buying, possibly beyond the overnight swing highs, around the 0.7340-45 region, before positioning for a move back towards reclaiming the 0.7400 round-figure mark.

Heading into the key central bank event, the release of the US Monthly Retail Sales figures might influence the USD price dynamics. This, along with the broader market risk sentiment, will help traders grab some short-term opportunities.

Technical levels to watch