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- AUD/USD rises further to near 0.6910 as de-escalation in the Middle East war has boosted investors’ risk appetite.
- Both the US and Iran have signaled readiness to end the Middle East war.
- Investors await the US ADP Employment data for fresh cues on the interest rate outlook.
The AUD/USD pair gives back some of its early gains, but still trades 0.12% higher to near 0.6910 during the late Asian trading session on Wednesday. The Aussie pair extends Tuesday’s recovery move, as hopes of a ceasefire in the Middle East have strengthened after comments from both the United States (US) and Iran signaling willingness to end the war.
The expectation of an end to the month-long Middle East war has improved the demand of riskier assets. As of writing, S&P 500 futures trade 0.33% higher even after surging almost 3% on Tuesday, reflecting a significant improvement in investors; risk appetite.
Meanwhile, the US Dollar (USD) extends its corrective move as its safe-haven demand has diminished amid de-escalating Middle East tensions. During the press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 99.75.
Going forward, investors will focus on the US ADP Employment Change and the Manufacturing PMI data for March, which will be published in the North American session. Investors will pay close attention to the private employment data to get fresh cues on the US interest rate outlook.
AUD/USD technical analysis
AUD/USD trades higher at around 0.6910 at the press time. However, the near-term bias is mildly bearish as the pair now holds below the 20-day Exponential Moving Average (EMA), which has started to roll over after capping recent rebounds near the 0.70 area. Price has transitioned from trading above this average to respecting it as dynamic resistance, underscoring a loss of upside momentum from the mid-0.71 region.
The recovery move by the 14-day Relative Strength Index (RSI) above 40.00 after sliding below that level signals the presence of buying interest at lower levels, which diminishes the strength of an overall bearish tone.
Initial resistance emerges at 0.6980, where the 20-day EMA clusters with recent minor swing highs, followed by stronger resistance at 0.7050, whose break would be needed to challenge the 0.7120 peak. On the downside, the March 31 low at 0.6834 is the immediate support is at 0.6885, guarding the late pullback lows, with a break exposing the January 7 high of 0.6766 as the next level.
