AUD/USD lifted by Oil deal-driven risk-on

The AUD/USD pair staged a solid comeback, after a weaker Asia opening, now taking the rate beyond the mid-point of 0.74 handle amid a risk-friendly market environment, underpinned by weekend’s oil output cut deal.

AUD/USD recovers to test 10-DMA at 0.7455

Currently, the AUD/USD pair trades 0.11% higher at 0.7456, retracing from session tops placed just ahead of 5-DMA at 0.7464. The overnight rally in oil prices after markets cheered an oil output cut finally reached between the OPEC and non-OPEC producers on Saturday, provided some impetus to the resourced-linked AUD.

Moreover, oil deal-induced risk-on trades across the markets also collaborated to the bullish sentiment around the higher-yielding emerging market currency, while the US dollar remains broadly subdued.

Further, analysts at Goldman Sachs lifted copper prices forecasts for next year, which also helped the Aussie to take on a minor-recovery from a brief dip to 0.7430 witnessed in the opening trades.

However, further upside looks limited as markets turn cautious stepping into the FOMC week, with a 25-bps hike already priced-in by investors.

AUD/USD Levels to watch   

The pair finds the immediate resistance at 0.7505 (Nov 17 high) above which gains could be extended to the next hurdle located 0.7575 (Nov 16 high) and 0.7600 (zero figure). On the flip side, the immediate support located 0.7400 (round number). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7385 (key support) and below that at 0.7366 (Dec 1 low).