AUD/USD consolidates in a range near mid-0.7200s, FOMC minutes awaited

• AUD/USD now seems to have entered a bullish consolidation phase near 18-month tops.
• The downside remains limited amid weaker USD and the prevalent upbeat market mood.
• Investors seemed reluctant to place fresh bullish bets ahead of the FOMC meeting minutes.

The AUD/USD pair was seen oscillating in a band, around mid-0.7200s through the early European session and consolidated the recent strong gains to the highest level since February 2019.

The US dollar remained depressed amid the uncertainty over the next round of the US fiscal stimulus measures, which has been fueling concerns about the US economic recovery. Apart from this, the upbeat market mood further underpinned the perceived riskier Australian dollar and extended some support to the AUD/USD pair.

The global risk sentiment remained well supported by the optimism over a potential vaccine for the highly contagious coronavirus disease. The risk-on flow was evident from the recent bullish run in the US equity markets, with the S&P 500 Index futures scaling record highs during the early part of the trading action on Wednesday.

Despite the supporting factors, investors seemed reluctant to place fresh bullish bets, instead preferred to wait on the sidelines ahead of the release of the latest FOMC meeting minutes. This, coupled with worries over escalating US-China relations further contributed to the AUD/USD pair's range-bound trading action.

Tensions between the world's two largest economies escalated further after the Trump administration's latest move on Monday to further tighten restrictions on China's Huawei Technologies, aimed at cracking down on its access to commercially available chips. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move.

Technical levels to watch