AUD/USD climbs to two-day tops, beyond mid-0.7100s

• AUD/USD gained traction for the second consecutive session on Thursday.
• Renewed hopes for additional US fiscal stimulus boosted investors’ confidence.
• The risk-on mood undermined the safe-haven USD and remained supportive.

The AUD/USD pair broke out of its Asian session consolidation phase and jumped to two-day tops, around the 0.7155 region in the last hour.

Renewed hopes about the next round of the US fiscal stimulus measures remained supportive of the prevalent upbeat market mood. This was evident from a positive trading sentiment around the equity markets, which dented the US dollar's relative safe-haven status and benefitted the perceived riskier Australian dollar.

After shaking markets by abruptly calling off talks with Democrats over the latest stimulus measures, the US President Donald Trump said that he was ready for gradual spending measures, including support for individuals, small businesses and airlines. This, in turn, changed the market sentiment and undermined safe-haven assets.

Even the minutes of the September FOMC meeting, released on Wednesday, revealed that the upgrade in economic projections was conditioned on additional fiscal measures by the government. Policymakers remain worried the lack of further stimulus would jeopardize the economic recovery that was moving faster than expected.

A mildly softer tone surrounding the greenback assisted the AUD/USD pair to gain traction for the second consecutive session and move away from weekly lows, or levels just below the 0.7100 mark touched on Wednesday. The uptick, however, lacked any strong bullish conviction and thus, warrants caution for aggressive bulls.

Market participants now look forward to the US economic docket, highlighting the release of the usual Initial Weekly Jobless Claims. The data, along with the broader market risk sentiment will influence the USD price dynamics and produce some meaningful trading opportunities.

Technical levels to watch