AUDUSD breaks through 0.6480 to hit one-month highs at 0.6530 area

• The aussie breaks higher to reach one-month highs above 0.6300.
• The US dollar dives with all eyes on the mid-term elections.
• AUDUSD: A breach of 0.6550 might puss the pair to 0.6680/6750 – SocGen.

The Australian dollar broke higher with the US dollar dropping across the board on Tuesday’s US session. The pair has broken past 0.6480 resistance area to reach levels past 0.6500 for the first time since early October.

The dollar dives with the market's focus on the US elections

A hitherto steady US dollar has lost momentum on the US morning trade, heading lower across the board with the market focusing on the US mid-term elections. Although the final results may still take days, the first polls are anticipating a Republican victory, that might bring the US congress to a gridlock.

That scenario would complicate Biden’s plan to pass the fiscal stimulus measures projected for the next year, which would provide further reasons for the Fed to ease its sharp monetary tightening cycle.

In a rather thin macroeconomic docket, Australian Business conditions deteriorated less than expected in October, although business confidence stalled, reaching its lowest level since January, according to data from the National Australian Bank.

In the US, the NFIB Business Optimism index retreated to 91.3 in October from 92.1 in the previous months. The highlights of the week in the US =calendar, however, will be October’s CPI data, which might offer further insight into December’s monetary policy decision.

AUDUSD: Above 0.6550, the pair might reach 0.6680/6750 – SocGen

From a technical perspective, FX analysts at Société Générale see the pair appreciating further if the 0.6550 resistance is broken: “The pair is evolving within an Inverted Head and Shoulders denoting potential rebound (…)Neckline at 0.6550 is the first layer of resistance. If this is overcome, a short-term up move could materialize towards the July low of 0.6680/0.6750.”

Technical levels to watch