AUD/USD off 17-month tops, still above 0.7200 ahead of US data

• AUD/USD stalls the upside in Europe.
• USD supply, firmer S&P 500 Futures and upbeat China PMI support.
• Focus shifts to US stimulus negotiations, US data for fresh incentives.

The overnight recovery in AUD/USD regained traction above 0.7200, as the bulls challenged 17-month highs near 0.7230 amid unabated US dollar selling seen across the board.

At the press time, the spot retraces to 0.7210, still adding 0.25% on the day. The aussie remains on track for the fourth straight monthly gains.

The greenback remains sold-off into growing political and economic concerns, courtesy of the intensifying coronavirus spread across the US, which has translated into staling economic recovery and made President Donald Trump float the idea of delaying the November election.

Further, record-low US Treasury real yields (inflation-adjusted) combined with the lack of progress on the US fiscal aid and month-end flows exacerbate the pain the dollar.

On the AUD-side of the equation, the aussie benefits from the upbeat official Chinese Manufacturing PMI data, which showed that the manufacturing sector expansion is picking up pace. Also, the rebound in the US S&P 500 futures is boding well for the higher-yielding currency. Not to forget the renewed surge in gold prices, which renders positive for the resource-linked aussie.

Attention now turns towards US Personal Spending and Income data and US stimulus talks for fresh trading impetus on the pair.

AUD/USD technical levels

The immediate upside will likely face stiff hurdle 0.7228 (17-month high). The next resistance is aligned at 0.7250 (psychological level). On the flip side, the immediate support is seen at 0.7180/71 (5-DMA/ pivot point), below which the 10-DMA at 0.7138 could be tested.

AUD/USD additional levels