AUD/USD is on a steady decline after facing rejection at 0.7800 in the overnight trades. The Aussie tests 0.7750 amid the risk-off market mood, which aids the rebound in the safe-haven US dollar.
The US dollar attempts a bounce ahead of the European open, recovering from the dovish take from the Fed Chairman Jerome Powell. Powell said in his speech Thursday that the time to raise interest rates is ‘no time soon’.
The risk sentiment remains sour, as investors scrutinize U.S. President-elect Joe Biden presented his $1.9 trillion stimulus plan on Thursday. Interestingly, the major stimulus plan did not provide any support to commodity-related currencies, which has also helped put a bid under the greenback, weighing on the Aussie.
Today, foreign exchange market traders will focus on the economic data from the U.S. Analysts expect that Retail Sales remained unchanged on a month-over-month basis in December. It should be noted that a negative surprise is possible given the recent developments in the job market.
The latest Initial Jobless Claims report indicated that 965,000 Americans filed for unemployment benefits in a week as the second wave of the virus has started to put significant pressure on the economy.
However, the economy will soon get support from the new stimulus plan, and it remains to be seen whether safe-haven assets like the U.S. dollar will remain in demand in such circumstances.
The AUD bulls could find some support from the tumbling US Treasury yields, considering a dovish monetary policy likely to be maintained by the Fed in the coming months.
Meanwhile, the US Retail Sales and Michigan Consumer Sentiment will offer fresh direction on the greenback, eventually influencing the Aussie pair. Also, of note remains China’s Q4 GDP report due Monday at 0130 GMT.
AUD/USD did not manage to settle above the resistance at 0.7760 and is pulling back while the U.S. dollar is gaining ground against a broad basket of currencies.
The U.S. Dollar Index is currently trying to get to the test of the nearest resistance level at 90.50. If the U.S. Dollar Index manages to get above this level, it will move towards the next resistance at 90.70 which will be bearish for AUD/USD.
AUD/USD Short (Sell)
ENTER AT: 0.77450