AUD/USD pares daily gains, drops below 0.6850 on broad USD strength
- AUD/USD reverses its course after climbing above 0.6900.
- US Dollar Index gains traction as US stock indexes turn red.
- AUD/USD remains on track to close week virtually unchanged.
The AUD/USD pair capitalized on the risk-on flows during the first half of the day and rose to a daily high of 0.6912 but made a sharp U-turn during the American session. As of writing, the pair was down 0.1% on the day at 0.6845. On a weekly basis, the pair is virtually unchanged at the current level.
Risk aversion boosts USD
After starting the day sharply higher, Wall Street's main indexes came under renewed bearish pressure to reflect a souring market sentiment, which helps the greenback gather strength.
With the S&P 500 and the Dow Jones Industrial Average losing more than 0.5% on the day, the US Dollar Index (DXY) is looking to extend its winning streak into a fourth straight day on Friday. At the moment, the DXY is at its highest level since early June at 97.60, up 0.15% on the day.
Earlier in the session, Randal Quarles, Vice-Chair of the Federal Reserve, argued that there had never been more uncertainty about the US' economic outlook to further weigh on the sentiment.
At the top of the hour, 1700 GMT, Jerome Powell, Chairman of the Federal Reserve, is scheduled to deliver a speech as well.
In her weekly analysis, "the pair needs to break above the psychological 0.7000 mark to turn bullish, then headed towards fresh yearly highs in the 0.7100 price zone," said FXStreet Chief Analyst Valeria Bednarik. "The 20 DMA provides immediate support at 0.6840, followed by 0.6770, where it bottomed this week. Below this last, the pair could enter in corrective mode and approach the 0.6650 region."
Technical levels to watch for