AUD/USD Holds Positive On Weaker USD
The AUD/USD pair broke out of a two-day-old consolidative trading range and climbed to its highest level in over a month, around the 0.6330 region on the last day of the week. The spot prices maintained their intraday positive bias through the first half of the European session, with bulls now awaiting a move beyond the 50-day Simple Moving Average (SMA) before positioning for any further gains amid broad-based US Dollar (USD).
The USD Index (DXY), which tracks the greenback against a basket of currencies, fell to a one-month low amid bets that the Federal Reserve (Fed) will lower borrowing costs further later this year. The hopes were boosted by US President Donald Trump’s comments on Thursday, saying that he would demand an interest rate cut soon. This, along with a generally positive risk tone, weakened the safe-haven US dollar and provided a decent lift to the AUD/USD pair.
Global risk sentiment got an additional boost on Friday after Trump said that he would rather not use tariffs on China and that he could reach a trade deal with the world’s second-largest economy. Moreover, Trump’s comments eased inflation concerns and triggered a fresh leg down in the US Treasury bond yields, which turned out to be another factor weighing on the USD. Additionally, technical buying above the 0.6300 mark contributed to the AUD/USD pair’s intraday positive move.
With the latest leg up, spot prices have now rallied around 200 pips from the lowest level since April 2020 touched earlier this month and remain on track to snap three consecutive weeks of losing streak. Traders now look forward to the release of US PMIs for some impetus later during the early North-American session for some impetus. The focus would then shift to the official Chinese PMIs on Monday, which would influence sentiment surrounding the China-proxy Australian Dollar (AUD).
Source: FXStreet
