AUD/USD eases from 0.6900 ahead of Aussie Q1 GDP

• AUD/USD steps back the highest since mid-January with 0.6899 being the recent top.
• A broad risk-on sentiment, weak US dollar favor the Aussie pair’s run-up.
• Riots in the US continue despite US President Trump’s warning.
• A long Aussie data line ahead but Q1 GDP stands out.

Having probed the highest since January 17 in the last hour, the 0.6899 level, AUD/USD drops to 0.6890 amid the early Wednesday morning in Asia. The Aussie pair seems to cheer broad US dollar weakness and optimism surrounding the economic reopen, backed by the absence of any major negatives from the RBA, to probe the multi-week high. Though, the latest pause in the rise could be traders’ worries ahead of the key data.

DXY flashed six-day losing streak to refresh 11-week low…

The US dollar index (DXY), a gauge of greenback strength versus major currencies, extended the previous five-day fall to the fresh lows since March 16, the 97.43 mark, ahead of recovering a bit to 97.66 at the end of Tuesday’s US session.

Despite a light calendar the previous day, the US currency failed to stop its declines as protests against the alleged police killing of Minnesota’s George Floyd continued. The civil unrest turned severe during the early-day and faded strength after the military used forces on US President Donald Trump’s direction. Even so, the public outrage still prevails in the world’s largest economy, pushing President Donald Trump to use more resources as he earlier promised.

Markets remain optimistic…

Global markets mostly ignored tensions emanating from the US amid economic restart in Europe. Germany flashed signals to reopen tourism the previous day while other European countries are also on the path to pre-pandemic activity. It should be noted that most of the region’s economies rely on tourism as the main source of income.

Other than the upbeat expectations from the economic restart, hopes of further stimulus from the European Central Bank (ECB), as well as some of the top-tier central banks also favored the bulls.

It’s worth mentioning that the RBA failed to utter any major worries for the Pacific nation in the Rate Statement published on Tuesday.

Against this backdrop, the US 10-year Treasury yields gains 2.5 basis points (bps) to .687% whereas Wall Street benchmarks also closed with mild gains by the end of Tuesday’s session in the US.

Moving on, a slew of Australia’s data could keep the AUD/USD pair traders busy during Wednesday’s Asian session. However, the first quarter (Q1) GDP figures, expected -0.3% versus +0.5% prior, will be the key. Additionally, comments from the RBA’s Assistant Governor (Financial System) Michele Bullock and housing market data will also be crucial to watch near-term direction.

Technical analysis

With the near-term trading conditions signaling overbought mood, a pullback towards the early-January low near 0.6850 can’t be ruled out. However, any further fall can recall February tops near 0.6775. Meanwhile, a sustained rise past-0.6900 enables the pair to aim for January 16 top near 0.6935 ahead of targeting 0.7000 round-figure.