AUD/USD takes out 0.7300 amid notable US dollar supply

The AUD/USD pair extends its five-day winning streak into the European session, hitting the highest levels since December 2018 at 0.7313. The spot remains on track to book a huge weekly gain.

Following a brief phase of consolidation overnight, the major extended its steady rise and surpassed the highs of 0.7290, reached after the US Federal Reserve (Fed) Chairman Jerome Powell’s Jackson Hole speech.

The advance is the pair is mainly driven by the broad-based US dollar weakness. The greenback faces a double-whammy from Fed Powell’s adoption of the average inflation targeting framework on one hand.

Meanwhile, the greenback also felt the heat of a sharp sell-off in USD/JPY amid pollical uncertainty in Japan after Prime Minister Shinzo Abe was reported to step down. The US dollar index drops 0.36% to 92.66, at the moment.

The pause in the US Treasury yields rally amid renewed risk-aversion also benefited the spot, boosting the attractiveness of the aussie dollar as an alternative higher-yielding asset. Further, the gains in the S&P 500 futures also lend support to the upside in AUD/USD.

Amid the upbeat momentum, the aussie paid little heed to the reports that China halted the Australian beef imports due to a banned substance. Also, US President Donald Trump’s promise to end reliance on China 'once and for all', in his acceptance speech to 2020 Republican National Convention, failed to deter the AUD bulls.  Trump also said that he would impose tariffs on companies that leave the US. 

Next of relevance remains the US Core PCE Price Index and Consumer Sentiment data for the aussie traders, as the dust settles over the Powell aftermath.

AUD/USD Technical levels

The bulls now look to the daily classic R2 at 0.7329 en route the psychological barrier of 0.7350. To the downside, the daily pivot at 0.7255 could be tested. A break below the latter could bring the 5-DMA support at 0.7230 in play.

AUD/USD Additional levels