AUD/USD falls around 0.7350
The pair AUD/USD extended last week’s bullish momentum to hit fresh multi-month highs at 0.7382 amid widespread US dollar weakness.
Last week, The US Federal Reserve chairman, Jerome Powell, made a speech on Jackson Hole Symposium. It continues to weigh on the dollar negatively. According to Powell, a policy shift would allow inflation to run hotter than average to support the US economy.
Powell’s new monetary policy framework has fueled expectations of an extended period of low interest rates.
The Fed’s hopes and expectations for the cure of the coronavirus disease supported Asian stocks. Besides, stronger-than-expected official Chinese PMIs also joined optimism, strengthening the higher-performing Australian dollar.
Still, gains in the pair appear short-lived. Sellers went back to the market during profit-taking after the value increased to its highest level since December 2018. Also, a slight rebound seen in the US dollar against major currencies aided the decline.
Tensions between Australia and China weighed on the AUD
Investors also weighed in on tensions between Australia and China, its biggest trading partner. Beijing began an anti-subsidy investigation into some Australian imports of wine and cheese. On the other hand, the country was banned from supplying meat to china.
The clashes between the two countries have not been sudden. Everything started with iron ore. Throughout the first decade of the 2000s, Chinese companies began purchasing strategic mineral resources in Australia. The deal, which would give China control of Australia’s richest iron ore deposits, caused panic in Canberra. Whatever went on behind the scenes, China suspected that the Australian government played a role in it.
The markets are now looking forward to the US macroeconomic releases. Besides, they await the Reserve Bank of Australia, RBA policy decision for the next direction in prices.
AUD/USD technical levels
The bears are now looking to test the 5-day SMA level at 0.7315. The 0.7300 level could be tested below it. Looking up, overcoming the 0.7382 barriers, the confluence of the 20-month high, and the daily Pivot Point R2 resistance will make it easy to reach 0.7400.
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