AUD/USD stabilizes around 0.7170, looking to post small daily gains

The AUD/USD pair surged above 0.7200 earlier in the day. Still, it struggled to maintain its momentum as the USD began to gain strength during the US session. 

Following the US FDA’s permission to use antibody-rich blood plasma to treat COVID-19 infected patients, markets turned positive towards risk at the beginning of the week. The dollar struggled to meet demand as a safe-haven, and the US dollar index (DXY) fell below 93.00.

However, risk appetite helped the US Treasury yields gain traction and provided a boost to the USD. The DXY index turned positive on the day, above 93.20. The 10-year US Treasury yield is up nearly 2%.

The Conference Board Consumer Confidence Index will be featured on the US economic list later in the week. Investors will closely follow FOMC President Jerome Powell’s speech at the Jackson Hole Symposium.

Euro to Dollar rate erases gains and falls as the US dollar recovers

The EUR/USD pair turned lower after hitting 1.1850 and fell to 1.1792, modestly above the Asian session. Despite further increases, it is far from the maximum, showing that the recovery lacks strength. 

The reversal came amid a rally in the US dollar across the board. After the start of the US session, the dollar gained momentum. Meanwhile, US stocks remain in positive territory. The Dow Jones is slightly below the highs, up 0.95%, and the S&P 500 is up 0.70%.

EUR/USD continues to look somewhat weak after failing to recover to the 20-day moving average on Monday (1.1810). If the correction from multi-year highs continues, the next strong support appears around 1.1700/10.

Citibank analysts note in their weekly FX Insight that the pair needs to convincingly break through the 1.1900/20 resistance to sustain gains towards the higher levels of 1.24-1.27. However, the current consolidation sentiment points to a higher floor around the 1.1600 area.