AUD/USD Retreats from Multi-Month High, Still Well Bid Around 0.6800 Mark Amid Weaker USD

AUD/USD

The AUD/USD pair gains traction for the third successive day on Thursday and maintained its bid tone through the first half of the European session. The pair, however, trims a part of its intraday gains and retreats to the 0.6815-0.6810 region during the first half of the European session.

The AUD/USD bulls further took cues from a slight improvement in China’s Caixin Manufacturing PMI, which unexpectedly rose to 49.4 in November from 49.2 in the previous month. The reading marks the fourth successive monthly contraction amid widespread COVID-19 curbs.

This might keep a lid on any optimistic market move and act as a headwind for the AUD/USD pair. That said, the underlying bearish sentiment surrounding the USD and a sustained breakout through the 0.6755-0.6765 horizontal resistance supports prospects for additional gains. Hence, any meaningful pullback below the 0.6800 mark might still be seen as a buying opportunity and is more likely to remain limited.

Market participants now look to Thursday’s US economic docket, highlighting the release of the Fed’s preferred inflation gauge – the Core PCE Price Index – and ISM Manufacturing PMI. This, along with the US bond yields and the broader risk sentiment, will influence the USD price dynamics and provide some meaningful impetus to the AUD/USD pair.

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