AUD/USD bulls cross 0.6900 on softer US dollar ahead of ECB

• AUD/USD takes the bids to refresh intraday high, reverse the previous day’s pullback from three-week top.
• Market sentiment remains sour but the US dollar bulls step back amid hawkish expectations from the ECB.
• Downbeat Aussie data, comments from Australia PM also act as upside hurdles.
• ECB will be crucial, second-tier US data could also entertain traders.

AUD/USD cheers the US dollar weakness as it refreshes intraday high around 0.6915 during early Thursday morning in Europe. In doing so, the Aussie pair pays little heed to the downbeat data at home and mixed comments from Australia's Prime Minister (PM), not to forget the risk-aversion wave.

National Australia Bank’s (NAB) Business Confidence gauge dropped to the lowest levels since late 2021 while printing 5 the figure, below 16 market expectations and 15 prior. Also, the Aussie PM Anthony Albanese warned the Reserve Bank of Australia against “overreach” in its efforts to tamp down inflation. It’s worth noting that RBA Governor Philip Lowe teased 0.50% rate hike during his speech the previous day.

Elsewhere, the restoration of the gas flows from Russia’s Nord Stream 1 pipeline, even if gradual, appeared to have improved the market’s mood although Germany considers it as 30% of capacity.

However, risk-aversion remains on the table as fears of economic slowdown in Germany and political crisis in Italy join China’s worsening covid conditions to keep the market sentiment sour and weigh on the AUD/USD prices, due to its risk barometer status.

While portraying the mood, the S&P 500 Futures pare early day losses but the US 10-year Treasury yields fail to improve, down 1.5 basis points near 3.02%.

Looking forward, risk catalysts will be crucial for the AUD/USD traders ahead of the key monetary policy announcements from the European Central Bank (ECB). While the ECB’s likely disappointment appears to renew the US dollar buying afterward, any surprise might not hesitate to drag the DXY further towards the south, which in turn can propel the Aussie pair towards a fresh monthly high.

Also read: ECB Preview: Three critical factors to watch, and why EUR/USD is set to plunge

Technical analysis

AUD/USD bulls aim for the monthly high surrounding 0.6930 while extending the break of the previous resistance line from mid-June, near 0.6815 by the press time. However, the 50-day EMA near 0.6960 could challenge the pair buyers afterward, if not then the odds of witnessing the 0.7000 on the chart can’t be ruled out