AUD/USD jumped higher during the North American session as a press conference held by President-elect Donald Trump triggered broad-based weakness in the US Dollar. The currency outperformed all of its major counterparts to lead the gainer’s list, in line with the trend seen since the start of the year as the Aussie shows the largest gains for the year thus far.
The press conference disappointed Dollar bulls as the President-elect did not discuss proposed tax reforms or an expansionary fiscal policy that has been widely expected. The focus of the press conference was on the handoff of the Trump organization to family members to avoid a conflict of interest. Most of the questions addressed to the President-elect related to the recent news reports indicating that Russia had knowledge on Trump that could incriminate him. Trump also commented that he did not have any ties to Russia that would cause him to have a bias.
AUD/USD traded relatively flat on the day ahead of the press conference and surged higher by about 1% as the Dollar declined against all of its counterparts.
The US Dollar index (DXY) recovered to reach a high of 102.95 ahead of the press conference but dropped sharply to briefly trade at a marginal new low for the week. While the index has bounced near the prior low of the week, a 4-hour bearish candle is probable and will likely keep the index under pressure.
A range break in AUD/USD last week has triggered a momentum-driven rally in the currency pair and today’s upside move shows an increase in momentum. The pair had closed Tuesday’s session below resistance at 0.7364 but the sustained breach today provides a technical signal for a continuation of the uptrend. A horizontal level at 0.7454 had held the pair higher on two tests in the summer. The level has acted as resistance, causing a pullback shortly after the press conference. Stronger resistance, however, is seen ahead of the level as the pair is approaching the 200-period daily moving average. The indicator currently resides at 0.7499 and is likely to elicit some profit taking.