The AUD/USD currency pair maintained its previous session bullish bias and hit the intra-day high around above mid-0.7700 level mainly due to the all-time high gains in S&P 500 futures, which lent strong support to the perceived risk currency Australian dollar and contributed to the currency pair gains. The market trading sentiment was being supported by the hopes for additional U.S. fiscal stimulus measures and optimism over the rollout of COVID-19 vaccines. Moreover, the currency pair gains were further bolstered by the broad-based U.S. dollar bearish bias, which was triggered by multiple factors.
Across the pond, the buying interest around the currency pair got an additional boost following the release of better-than-expected domestic employment details. On the negative page, the long-lasting coronavirus woes and Sino-US tensions remain on the card, which might cap the pair’s upside momentum. The AUD/USD currency pair is currently trading at 0.7771 and consolidating in the range between 0.7742 – 0.7778.
The global risk sentiment was being supported by hopes over the more aggressive fiscal spending under Joe Biden’s presidency, which will boost economic growth. Biden expressed a plan to inject $1.9 trillion into the struggling U.S. economy during his first hours as the new U.S. President. Besides this, the optimism over a potential vaccine/treatment for the highly infectious coronavirus also played its heavy role in supporting the market trading sentiment. The Oxford scientists showed a willingness to make a new formula-vaccine to combat emerging strains. Meanwhile, the World Health Organization (WHO) also supports the faster rollout of the covid vaccines. These positive developments put a bid under the U.S. stocks, lifting major indices higher, which was seen as one of the key factors that undermining the safe-haven greenback.
As in result, the broad-based U.S. failed to gain any bid and remained pessimistic on the day. Apart from this, the losses in the U.S. dollar were further sparked by the optimism over the rollout of vaccines for the highly contagious coronavirus disease. Hence, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.19% to 90.300 by 11:26 PM ET (4:26 AM GMT).
Across the pond, the buying interest around the currency pair got an additional boost following the release of better-than-expected domestic employment details. On the data front, the Aussie unemployment rate dropped to 6.6% in December. These figures were below consensus estimates, pointing to a downtick to 6.7%, and marked the lowest level since April. Meanwhile, the economy added 50,000 jobs during the reported month. Conversely, the slowdown in full-time employment may hold buyers from placing aggressive bets.
Across the Atlantic, the intensifying coronavirus woes keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the AUD/USD currency pair. Also, capping the gains could be the long-lasting tussle between the U.S. and China, which is picking up the pace day by day as China recently declared a list of 28 U.S. individuals, most of whom are Trump team members, to be sanctioned.
Looking forward, the market traders will keep their eyes on updates from the Biden administration. Meanwhile, the European Central Bank’s (ECB) monetary policy and U.S. Unemployment Claims will also be key to watch. In addition to this, the risk catalyst like geopolitics and the virus woes will not lose their importance.
Daily Support and Resistance
S1 0.7662
S2 0.7703
S3 0.7724
Pivot Point 0.7743
R1 0.7765
R2 0.7783
R3 0.7823
Entry Price – Buy 0.77758
Stop Loss – 0.77358
Take Profit – 0.78158
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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