AUD/USD clings to modest gains above 0.7600 mark, upside seems limited
- A modest USD pullback from multi-month tops assisted AUD/USD to gain traction on Wednesday.
- The upbeat US economic outlook should help limit the USD downside and cap gains for the major.
- The US economic docket, US President Biden’s spending plan eyed for some trading opportunities.
The AUD/USD pair edged higher during the early European session and refreshed daily tops, around the 0.7615-20 region in the last hour, albeit lacked follow-through.
Having shown some resilience below the 0.7600 mark, the pair managed to gain some positive traction on Wednesday and for now seems to have stalled the overnight retracement slide from one-week tops. The US dollar witnessed some profit-taking and moved away from multi-month tops. This, in turn, was seen as a key factor that extended some support to the AUD/USD pair, though any meaningful recovery still seems elusive.
Investors remain optimistic about the outlook for the US economy amid the impressive pace of coronavirus vaccinations and US President Joe Biden's spending plan. In fact, Biden announced the opening of the US COVID-19 vaccine program for 90% of American adults by April 19 and will outline details about the first stage of his infrastructure spending plan of around $3 trillion to $4 trillion later this Wednesday.
This, along with a cautious mood around the equity markets, might continue to underpin the USD and keep a lid on any strong gains for the AUD/USD pair. Even from a technical perspective, the overnight slide back below the 100-hour SMA favours bearish traders. Hence, any subsequent positive move might still be seen as a selling opportunity.
Market participants now look forward to the US economic docket, featuring the release of the ADP report on private-sector employment, Chicago PMI and Pending Home Sales data. Apart from this, the US fiscal stimulus headlines will influence the USD price dynamics and produce some short-term trading opportunities around the AUD/USD pair.
Technical levels to watch