AUD/USD edges higher to 9-day tops above 0.7130 on improved sentiment

  • US Dollar Index stages a modest recovery on Friday.
  • Import prices in the U.S. rise more than expected in September.
  • Wall Street starts the day with strong gains. 

Following yesterday's impressive upsurge, the AUD/USD pair stayed relatively calm in a tight range above 0.71 for the majority of the day on Friday before gaining traction in the last hour. As of writing, the pair was trading at 0.7135, adding 0.15% on the day.

In the aftermath of the high volatility witnessed in the second half of the week, investors seem to have taken a backseat on Friday. The US Dollar Index, which dipped below the critical 95 handle, is now making a correction and was last seen up 0.2% on the day at 95.23. Earlier in the session, the data from the U.S. showed that the import price index rose 0.5% in September following August's 0.4% decline and surpassed the market expectation of 0.2%.

Meanwhile, in an interview with CNBC, Chicago Fed President Charles Evans argued that a slightly restrictive Fed policy, which could translate to 50 basis points above the neutral rate, would be appropriate.

Despite the modest USD strength, however, the improved market sentiment is helping risk-sensitive currencies such as the AUD on Friday. After suffering heavy losses for two straight days, major equity indexes in the U.S. started the day sharply higher. The Dow Jones Industrial Average and the S&P 500 are adding 1.5% and 1%, respectively, in the first hour of trading. 

Technical levels to consider

The initial resistance for the pair could be seen at 0.7170 (20-DMA) ahead of 0.7210 (50-DMA) and 0.7270 (Sep. 27 high). On the downside, supports are located at 0.7110 (daily low), 0.7040 (Oct. 5 low), and 0.7000 (psychological level).

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