AUD/USD clings to gains near multi-day tops, eyeing a move beyond 0.7100 mark
- AUD/USD edged higher for the second consecutive session on Tuesday.
- A softer tone around the USD was seen as a key factor lending support.
- The uptick lacks bullish conviction ahead of the US presidential debate.
The AUD/USD pair traded near four-day tops during the early European session, with bulls now looking to extend the momentum further beyond the 0.7100 round-figure mark.
The pair gained positive traction for the second consecutive session on Tuesday and recovered further from two-month tops, around the key 0.7000 psychological mark, coinciding with 100-day SMA support. The overnight strong rally in the equity markets prompted some US dollar profit-taking, which, in turn, prompted a short-covering move around the perceived riskier Australian dollar.
The global risk sentiment remained well supported by upbeat Chinese data released over the weekend, which offered signs of economic recovery in the world's second-largest economy. Adding to this, the latest optimism over additional US fiscal stimulus measures further boosted investors' confidence and dented the greenback's relative safe-haven status.
The USD pullback, however, remained limited amid worries that the second wave of coronavirus infections could lead to severe lockdown restrictions and halt the current economic recovery. Adding to this, the US political uncertainty might further hold investors from placing any aggressive bets and cap any strong gains for the AUD/USD pair.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the recent corrective fall is over and positioning for any further positive move. Market participants now look forward to the release of the Conference Board's US Consumer Confidence Index for some trading impetus later during the early North American session.
The key focus, however, will be on the first US presidential debate between President Donald Trump and Democrat candidate Joe Biden, scheduled later this Thursday. This, along with important US macro data, including the closely watched US monthly jobs report, will influence the near-term USD price dynamics and help investors to determine the next leg of a directional move for the AUD/USD pair.
Technical levels to watch