AUD/USD trapped within a range below the 0.7300 level

The AUD/USD pair lacked a clear directional bias during the European session on Monday. It remained trapped within a narrow trading band below the 0.7300 level.

The pair reached 0.7400 at the beginning of the last week. However, it has not been able to profit from the bounce and pulled back soon to 0.7200. It has been the lowest level in two weeks. The current selling bias around the US dollar supports the decline. The analysts hope for the next round of fiscal stimulus measures by the US Federal Reserve.

Besides, bullish market sentiment has pressed further on the USD and gave some support to the AUD/USD pair. AstraZeneca’s news resuming phase 3 trials for its coronavirus vaccine gave a strong boost to global risk sentiment. Besides, Pfizer also declared the possibility of submitting late-stage data for its Covid-19 vaccine at the end of October.

Yet, the growing tensions between the world’s two largest economies, the United States and China, have prevented the bulls from opening aggressive positions. China has taken reciprocal restrictions to the US embassy and consulates in the country. The move came in response to US-imposed restrictions on Chinese diplomats in the United States. The Chinese foreign ministry announced on Friday that Beijing had sent a diplomatic note to the US. 

Federal Banks will release the outcome of meetings this week

Investors seem hesitant to position themselves aggressively. They look to the central bank events this week. 

The reserve bank of Australia is going to release the minutes of its recent meeting today. It could affect the Australian dollar. 

On the other hand, the Federal Open Market Committee will have a meeting on Wednesday. Its outcome will also play a significant role in determining the next directional movement for the AUD/USD pair.