- AUD/USD regains positive traction on Thursday amid fresh selling around the USD.
- Risk appetite weighs on safe haven USD and benefits higher perceived risk AUD.
- Fed’s optimistic tilt could act as a tailwind for USD and limit the pair’s upside.
The intraday selling bias around the USD has pushed the AUD/USD pair to fresh daily highs in the 0.7260 region at the start of the European session on Thursday.
Following the previous day’s post-FOMC pullback from the 0.7300 region, the AUD/USD pair has regained fresh buying near the 0.7220 support area on Thursday. The emergence of some selling around the US dollar has resulted in the second consecutive day of positive movement.
A bullish tilt amid prevailing risk appetite has resulted in the DXY dollar index pulling back from one-month highs touched the previous day. Evergrande Group has agreed to settle interest payments on an internal bond, which has elevated global risk sentiment.
This, in turn, has contributed to the perceived riskier Australian dollar, though any significant move higher still seems unlikely. A moderation in the pace of asset purchases may soon be warranted if economic growth continues broadly as expected, according to the U.S. central bank.
In addition, Fed Chairman Jerome Powell said that asset purchases during the pandemic may end altogether by mid-2022. Additionally, the dot plot showed a growing tendency to raise interest rates in 2022, which should continue to boost the USD.
Even from a technical perspective, the recent decline over the past three weeks has occurred in a bearish channel. As a result, we see a well-established near-term downtrend and further losses are likely, so aggressive bulls should act with caution.
US economic calendar now awaits the release of weekly jobless claims and preliminary PMIs for September. Combined with broader market risk sentiment, the USD could be weighed down, which will help to generate some momentum for the AUD/USD pair.