AUD/USD keeps gains around 0.6940 as risk sentiment improves

• AUD/USD manages to remain above 21-day SMA amid broad USD weakness, risk recovery.
• Absence of new war threats from the Middle East, update on US-China trade deal seems to have favored the pair.
• Australia’s ANZ Job Advertisements, trade/political news can entertain markets ahead of the US ISM Non-Manufacturing PMI, Factory Orders.

AUD/USD remains modestly changed to 0.6940 amid the initial Asian session on Tuesday. The Aussie pair benefited from the recovery in the market’s risk sentiment off-late. Even so, the recent headlines keep the US-Iran tension on the table.

Be it global leaders’ efforts to placate Iran or a halt in war threats from the Middle East, the absence of further worsening in the US-Iran/Iraq tussle seems to have receded market fears on Monday.

Other than the geopolitical relief, news that US-China trade progress will be made the next week and the recovery in the global PMI data also have pleased traders. Furthermore, The Hill’s news that the Republican Party senators want to change the US Senate’s rules and allow for lawmakers to dismiss articles of impeachment against President Donald Trump before the House sends them over, also added to the risk-on.

However, the recent headlines suggest that the US has denied entry to Iran’s Foreign Minister Mohammad Javad Zarif, who was to speak at the United Nation’s (UN) Security Council about the US assassination of Qassem Suleimani. Additionally, the news was also making rounds that the US troops aren’t going to leave Iraq, which is in contrast to the earlier media releases.

With this, the US 10-year Treasury yields gain above two basis points to 1.81% whereas S&P 500 Futures also mark 0.23% gains to 3,242.

Looking forward, trade/political headlines will keep the driver’s seat while Australia’s December month ANZ Job Advertisements, prior -1.7%, can offer intermediate moves. Though, the US ISM Non-Manufacturing PMI, Trade Balance and Factory Orders will gain major attention on the economic calendar.

Technical Analysis

While 21-day SMA near 0.6920 offers immediate support, sellers will look for entry below 200-day SMA, at 0.6896 now. On the contrary, 0.6980 and 0.7000 seem to restrict the pair’s short-term upside.