AUD/USD remains firm at around 0.6910s despite risk aversion and a soft USD

• AUD/USD climbs and hovers above the 50-day EMA, eyeing the 20-day EMA on the upside.
• US last week’s inflation data failed to bolster the USD, as the AUD/USD snapped three days of losses.
• AUD/USD traders are eyeing the RBA and the FOMC minutes, each revealed Tuesday and Wednesday.

AUD/USD has managed to stage a recovery after dropping to a new YTD low at 0.6811, which, consequently, cracked the 50, 100, and 200-day Exponential Moving Averages (EMAs). However, the AUD/USD pair reclaimed the 0.6900 figure and is trading at 0.6912, above its opening price by 0.53%.

A soft US Dollar, a tailwind for the AUD/USD amidst a lack of data

The New York trading session remains quiet in observance of US President Day. US equity futures reflect risk aversion, though the AUD/USD pair portrayed the opposite, with renewed demand for the Aussie Dollar (AUD).

Even though last week’s data from the United States (US) showed that inflationary pressures remain tilted to the upside, the greenback has not found its floor on Monday, undermined by falling US  Treasury bond yields. The US Dollar Index (DXY), a gauge of the buck’s value vs. a basket of six currencies, is pairing some of its earlier losses but remains down by 0.02%,  at 103.864

Speculations that the People’s Bank of China (PboC) would continue to propel the economy increased flows toward the second-largest economy in the world. According to Bloomberg, Goldman Sachs raised its bet on Chinese equities, as its reopening would underpin global growth. Therefore, flows to the AUD/USD boosted the Aussie Dollar (AUD), despite the Federal Reserve’s (Fed) resolution to tackle high inflation in the US.

Another reason that has underpinned the AUD/USD is that the Reserve Bank of New Zealand (RBNZ) will raise rates on Wednesday, a headwind for the US Dollar (USD). Even though the Reserve Bank of Australia (RBA) raised rates during the last week, a dismal employment report triggered a reversal, which weighed on the AUD/USD.

What to watch?

The Australian economic docket will feature Tuesday’s S&P Global PMI figures alongside the RBA’s last meeting minutes. On the US side, S&P Global PMIs find reading numbers would be released, and also the FOMC minutes.

AUD/USD Key technical levels