- DXY gains traction after easing down to the 94.40 handle.
- The AUD/USD pair remains directionless in the middle of its weekly range.
- Markets wait to see the details of the Senate tax plan.
After edging higher towards the 0.77 handle during the European session, the AUD/USD pair came under pressure and dropped to a fresh daily low at 0.7650. At the moment, the pair is trading at 0.7655, losing 0.3% on the day.
Despite that recent drop, the pair is confined in a 40-pip range on Thursday as investors remain reluctant to take positions before they see the differences between the Senate's and the GOP House's tax plans. “Markets should get a rough sense of how far apart the two versions are. And if the two are very far apart, expect the dollar to come under renewed pressure. Part of the recent dollar rally has been driven by market optimism regarding tax reform. Republican Senator Hatch stated what many already know, which is that the election results this week will further complicate matters,” BBH analysts argued in a recent report.
The US Dollar Index, which extended its technical correction to the 94.40 handle earlier in the day, gained some traction as American traders hit their desks. At the moment, the index is at 94.65, down 0.15% on the day. Today's data from the U.S. showed that the weekly initial jobless claims increased by 10K to 239K for the week ending November. Despite that rise, however, the four-week average remained at its lowest level since 1973.
Technical levels to consider
The pair could face the first technical hurdle at 0.7700 (psychological level/200-DMA) ahead of 0.7780 (Oct. 25 high) and 0.7830 (Oct. 23 high). On the flip side, supports are located at 0.7625 (Oct. 27/Nov. 7 low), 0.7570 (Jul. 7 low) and 0.7500 (psychological level).
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