AUD/USD Pair Struggles to Find a Direction
The AUD/USD pair lacks a strong directional bias and remains trapped within a narrow trading band. It is below the 0.7300 level during the European session on Monday.
The pair has been unable to capitalize on last week’s good bounce, from levels below 0.7200, or the lowest level in two weeks. It has witnessed moderate price action within a range on the first day of a new trading week. The drop remains supported by the prevailing selling bias around the US dollar, weighed down by the dwindling prospects for the next round of US fiscal stimulus measures.
Aside from this, bullish market sentiment has weighed further on the safe-haven USD and offered some support to the AUD/USD pair. Global risk sentiment has received a strong boost from the news that AstraZeneca resumes phase 3 trials for its COVID-19 vaccine. Additionally, Pfizer has also announced the likelihood of submitting late-stage data for its vaccine at the end of October.
China-US tensions prevent bulls from opening aggressive positions
However, the growing diplomatic dispute between the United States and China has prevented the bulls from opening aggressive positions. In recent events, China announced that Beijing sent a note on Friday. It detailed the restrictions to the US embassy and consulates. They include the US consulate in Hong Kong. The move came in response to US sanctions on Chinese people. That in turn, fueled concerns about worsening relations between the world’s two largest economies.
Investors also appear reluctant to position themselves aggressively, as attention remains focused on this week’s central bank events. The RBA is scheduled to release the minutes of its recent meeting on Tuesday, which could influence the Australian dollar. This, along with the outcome of Wednesday’s FOMC meeting, will play a key role in determining the next directional move for the AUD/USD pair.
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