AUD/USD stages a goodish bounce from sub-0.7100 levels amid stability in the equity markets. The formation of a bearish double-top on Tuesday warrants some caution for bullish traders. Wednesday’s key focus will be on the release of the FOMC monetary policy meeting minutes.
The AUD/USD pair edged higher through the early European session and was last seen trading near the top end of its daily trading range, around the 0.7135-40 region.
The pair managed to regain some positive traction on Wednesday and managed to recover a part of the previous day's sharp intraday fall of over 100 pips from the 0.7205-10 supply zone. The Australian dollar witnessed some selling after the Reserve Bank of Australia (RBA) opened the door for an interest rate cut as soon as in November.
The intraday bearish pressure aggravated further after the US President Donald Trump abruptly cancelled talks with Democrats on the economic stimulus package to boost the coronavirus-hit economy. Trump's surprise decision triggered a steep decline in the US equity markets and boosted the US dollar's relative safe-haven status.
The AUD/USD pair settled near the lower end of its daily trading range and dipped to sub-0.7100 level, or six-day lows on Wednesday before staging a goodish rebound. Signs of stability returning back to the equity markets turned out to be one of the key factors that prompted some short-covering around the perceived riskier aussie.
Given that the AUD/USD pair on Tuesday formed a classic bearish double-top pattern near the 0.7210 region, any subsequent move up runs the risk of fizzling out rather quickly. This makes it prudent to wait for some strong follow-through buying before traders again start positioning for any further near-term appreciating move.
