The AUD/USD extended its early-day winning streak and taking rounds near above the 0.7150 marks mainly due to the upbeat labor market data, which initially underpinned the Australian dollar and contributed to the currency pair gains.
The broad-based U.S. dollar losses, triggered by the coronavirus crisis and political deadlock over additional stimulus steps to strengthen the economic recovery from the coronavirus outbreak, also gave support to the currency pair. On the other hand, the market risk-off sentiment in the light of the resurgence of infections and geopolitical stresses turned out to be the major factor that capped the further upside in the currency pair. The AUD/USD is trading at 0.7170 and consolidating in the range between 0.7156 - 0.7188.
The gains in the currency pair could also be associated with the upbeat labor market data, but the risk-off market sentiment made it difficult for the currency pair to maintain its bullish momentum. At the data front, the Australian Bureau of Statistics' monthly data revealed that the Unemployment Rate rose to 7.5% in July but came in better than the market expectation of 7.8%. Above all, the Fulltime Employment rose by 43.5K during that period following June's decline of -38.1K.
However, the reason for the losses in the U.S. stock futures could be associated with on-going deadlock over additional stimulus measures to support the economic recovery from the coronavirus pandemic. The fresh geopolitical concerns, triggered after the U.S. administration's expressed their power, through sending stealth bombers near Taiwan, to fight the Chinese threat by showcasing nuclear weapons. As well as, the U.S. Central Command's tweet suggesting the Iranian Navy overtaking a ship called "Wila" also increased the geopolitical tension, which eventually considered negative for the trading market and capped further upside momentum for the currency pair.
Apart from this, the market trading sentiment was also bolstered by the US-EU tariffs war. The U.S. Trade Representative (USTR) Robert Lighthizer raises levies on France and Germany while marking the same for Greece and the U.K.
At the US-China front, China's Assistant Commerce Minister said after considering the current relationship between the US-China, that he hopes the U.S. to create conditions for the implementation of the phase-1 trade deal. He further added that the COVID-19 and U.S. export control measures hurt Chinese purchases on U.S. goods and services. However, traders gave little attention to the above statement.
Whereas, the market trading sentiment seemed rather unaffected by the optimism over the coronavirus vaccine. Notably, Russia's Health Minister Mikhail Murashko announced during the press conference on Wednesday, the first batch of the coronavirus vaccine is expected to be released within two weeks. It is worth reporting that the vaccine, Sputnik V, was produced jointly by the Gamaleya Research Institute and the Russian Defense Ministry.
Daily Support and Resistance
S1 0.7017
S2 0.7083
S3 0.7124
Pivot Point 0.715
R1 0.7191
R2 0.7217
R3 0.7284
The AUD/USD is trading sideways within a trading range of 0.7154 to 0.7133 level, and today the violation of this range will determine the further direction of the pair. Overall, the resistances are likely to be found around 0.7185 and 0.7239 level along with support at 0.7133 and 0.7107. Good luck!