AUD/USD's weakness contained at 0.7100, picks up to 0.7130 area

AUD/USD bounces up at 0.7100 and returns to 0.7130 area.

The aussie is set for a weekly gain despite the dovish RBA.

US elections and RBA to push the AUD below 0.7000 - Westpac

Australian dollar’s bearish reaction from one-week highs at 0.7155 area has been supported above 0.7100 and the pair managed to pick up to 0.7130 near the weekly close, as risk aversion eased and the US dollar resumed its near-term downtrend.

The aussie appreciates on US dollar weakness

The AUD/USD appreciated on Friday and is set to close the week with a 0.8% advance favoured by a weaker US dollar. The greenback has remained on the defensive for most of the week, amid the uncertainty about the outcome of the US elections and the lack of progress on the US coronavirus stimulus negotiations

The upside trend was halted on the early US session and the aussie trimmed gains with the US dollar staging a moderate comeback as risk appetite faltered, and the main Wall Street indexes dropped into negative territory.

On the other hand, the RBA’s dovish monetary policy stance is keeping a lid on Aussies’ upside attempts. The bank confirmed that monetary tightening had been discussed on the last meeting, earlier last week, which has opened the doors for a rate cut in November and is curbing AUD demand.

RBA and US elections to push AUD/USD below 0.7000 – Westpac

The FX analysis team at Westpac remains negative on the pair, anticipating a reversal below 0.7000: “The prospect of a huge RBA policy move coming just hours before polls close in the US on November 3 adds to the risks that this ‘Double Header’ event may yet push the AUD/USD pair below 0.70, at least in the short term though record Chinese steel production driving very strong iron ore prices and a rising RMB may limit any dips.”

Technical levels to watch