AUD/USD looks to retest five-week highs above 0.7000

  • AUD/USD regains poise in Europe amid an upbeat market mood.
  • Coronavirus vaccine hopes overshadow US-China tensions?
  • Attention turns to virus stats, US-China updates and US data.

AUD/USD is looking to regain the upside momentum while trading back above the 0.7000 level in early European trading, as the sentiment remains underpinned by the Moderna vaccine optimism.

 With the upbeat market mood extending into Europe, the US dollar returns to the back foot across its main peers following a brief recovery attempt seen on the renewed US-China escalation.

The risk appetite, overnight, was boosted by Moderna Inc. coronavirus vaccine tests’ promising results. The phase one results showed that the COVID-19 vaccine is safe and induces an immune response. The risk-on market profile downed the safe-haven US dollar and prompted a rally in the higher-yielding assets such as the aussie dollar.

In the Asian trades, however, the Aussie’s upside lost legs after hitting five-days high at 0.7018, as the US-China tensions intensified over the Hong Kong (HK) issue and limited the optimism on the Asian equities. Beijing vowed retaliatory sanctions against the US after President Donald Trump signed an order end to HK’s special status under US law to punish China.

The spot will continue to remain driven by the risk sentiment, in light of the US-China spat, coronavirus fears and vaccine optimism. The US Industrial Production data and the Fed’s Beige Book will be also eyed for fresh dollar trades.

AUD/USD technical levels

The immediate support is seen at 0.6965/58 (5-DMA/ pivot point), below which the 20-DMA at 0.6921 will be tested. On the flip side, the recovery will likely face stiff hurdle at 0.7018 (daily high). The next resistance is aligned at 0.7063 (June 10 high).

AUD/USD additional levels

 

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