AUD/USD regains ground above 0.7200

The AUD/USD is trading at 0.7230, testing the Asian session’s highs and in slightly positive territory. It rebounded to that level after falling to 0.7176, the lowest level since August 25.

The fall of the AUD/USD occurred in a context of the dollar’s strength throughout the market, accompanied by a risk aversion climate. Renewed nervousness over the coronavirus and fears of further lockdowns to curb the outbreak weighed on investor sentiment. Risk-off money flows benefited the safe-haven US dollar and puts some pressure on the AUD/USD pair.

Although the stock markets have mixed results or slight increase on Tuesday, the environment of caution continues to dominate and explains the dollar’s strength. 

One factor that added some weight to the Aussie was the statements of Guy Debelle, the official of the Reserve Bank of Australia, RBA. He stated that a lower exchange rate could be beneficial to the economy. He ruled out an intervention and said that the recovery of the economy is gradual and uneven.

Economic calendar

Meanwhile, USD bulls now appear to have become cautious amid expectations that Fed Chairman Jerome Powell will reaffirm the central bank keeping interest rates low for a more extended period.

Looking ahead to the next few hours and after Monday’s slide, what happens to stocks on Wall Street can have a broad impact and be decisive for AUD/USD pair.

There will be a lot of new information released in the US as the economic calendar shows. The Existing Home Sales Report, the Richmond Fed Manufacturing Index, will be published. The data can influence USD price dynamics, which will help traders seize some short-term opportunities along with broader market risk sentiment.

In Australia, the PMI and retail sales report will be released on Wednesday. Also, the Reserve Bank of New Zealand will announce its monetary policy decision, which may impact the Aussie.