AUD/USD eases from 3-week tops, still positive near mid-0.7100s

Haresh Menghani FXStreet

• Built on the overnight dovish FOMC-led strong rebound from weekly lows.
• An unexpected dip in Aussie unemployment rates provides an additional boost.
• A modest USD bounce/US-China trade tensions seemed to cap further gains.

The AUSD/USD pair trimmed a part of its early strong gains to three-week tops, albeit has managed to hold in the positive territory around mid-0.7100s.

The pair built on the overnight sharp rebound from weekly lows and further benefitted from an unexpected dip in the Aussie unemployment rate, which fell to 4.9% in February - the lowest level since June 2011.

This coupled with a positive tone around commodity space, especially copper, provided an additional boost to the commodity-linked Australian Dollar and further collaborated to the pair's goodish intraday up-move.

Meanwhile, the post-FOMC bearish pressure surrounding the US Dollar now seems to have abated, at least for now, which coupled with concerns over a lack of progress in the US-China trade negotiations capped further gains.

It is worth reporting that the Fed, in its latest monetary policy update on Wednesday, turned out to be more dovish than previously anticipated and indicated there will be no more rate hikes in 2019.

The central bank also trimmed its forecasts for economic growth and inflation, which eventually triggered aggressive USD selling and collaborated to the pair's sharp intraday bounce of nearly 100-pips on Wednesday.

Moving ahead, today's US economic docket, featuring the releases of Philly Fed Manufacturing Index and initial weekly jobless claims will be looked upon for some short-term trading opportunities.

Technical levels to watch

Immediate support is pegged near the 0.7130 region, below which the pair is likely to slide back towards testing the 0.7100 round figure mark. On the flip side, the 0.7165-70 zone might continue to act as an immediate resistance, which if cleared might assist the pair further towards reclaiming the 0.7200 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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