- AUD/USD attracted some dip-buying on Thursday and turned positive for the second straight day.
- The post-FOMC USD selling remained unabated and continued lending some support to the major.
- Worries about the fast-spreading Delta variant of COVID-19 acted as a headwind and capped gains.
The AUSD/USD pair bounced around 30 pips from the Asian session lows and was last seen hovering near the top end of its daily trading range, just below the 0.7400 mark.
The pair attracted some dip-buying on Thursday and is now looking to build on the overnight goodish bounce from the 0.7315 region, or one-week lows amid the prevalent US dollar selling bias. This, along with signs of stability in the equity markets, extended some support to the perceived riskier aussie and pushed the AUD/USD pair higher for the second straight day.
The FOMC announced its monetary policy decision on Wednesday and sounded optimistic, acknowledging that the economy has made progress towards the maximum employment and price stability goals. However, the Fed Chair Jerome Powell took a dovish turn at the post-meeting press conference and emphasised that they were some ways away from substantial progress on jobs.
Powell was also cautious about tapering and said that policymakers discussed some details but it will take a few more meetings to get into it. The difference in tone between the statement and Powell's remarks weighed heavily on the greenback. Apart from this, a further decline in the US Treasury bond yields dragged the USD Index to the 92.00 neighbourhood or two-week lows.
That said, concerns about the economic fallout from the fast-spreading Delta variant of the coronavirus acted as a headwind for the Australian dollar and capped gains for the AUD/USD pair. In fact, New South Wales reported 239 news cases on Wednesday, the highest in 16 months. The authorities have said they want that number near zero before lifting restrictions on July 30 target date.
Even from a technical perspective, the AUD/USD pair, so far, has been struggling to make it through the 0.7400 round figure. This further makes it prudent to wait for some strong follow-through buying before confirming that the pair has bottomed out in the near term and positioning for any meaningful appreciating move.
Market participants now look forward to the US economic docket – highlighting the releases of the Advance second-quarter US GDP print, Initial Weekly Jobless Claims and Pending Home Sales. The first estimate is expected to show that growth in the world's largest economy accelerated by a robust 8.6% annualized pace during the April-June quarter.
The data, along with the US bond yields, might influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader market risk sentiment and development surrounding the coronavirus saga to grab some short-term opportunities around the major.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0800 after upbeat US data
EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.