Evergrande, Fed test corrective pullback towards 0.7300, RBA Minutes eyed

AUD/USD bounces off monthly low, snaps three-day downtrend.
Aussie PM Morrison dashes trade hopes from EU, Biden promotes UN membership.
China’s Evergrande, Fed tapering woes weigh on sentiment despite mildly easy covid fears of late.
RBA Minutes may reiterate virus-led economic challenges, could weigh on the prices.

AUD/USD struggles to keep recovery moves from the monthly bottom as traders brace for the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes during Tuesday’s Asian session.

That said, the Aussie pair seesaws around 0.7260 while snapping a three-day downtrend with minimal daily gains by the press time.

The latest rebound could have taken clues from Australia’s easing virus conditions and a pause in the S&P 500 Futures after the dismal performance of the Wall Street benchmarks. Even so, fears over fears over China’s Evergrande, the US stimulus and Fed tapering add to the sour sentiment and keep the AUD/USD sellers hopeful.

Australia registered a third consecutive daily fall in the covid infections the previous day, to 1,505 per the latest official figures. Also favoring the counter-trend traders are the chatters over US debt limit extension and push for vaccinations at home.

US Treasury Secretary Janet Yellen urged for another extension to the debt limit that is up for expiry in a few days to October.

On the contrary, dashed hopes of early US stimulus and Aussie PM Scott Morrison’s comments dimming the hope of the deal with the European Union (EU) join US President Joe Biden’s push for partnership with the United Nations (UN) to solve the key problems weigh on the market sentiment.

Above all, fears that China’s Evergrande isn’t only a curse to linked markets but will also roil the global financial world and the ripple effect will be larger amid the coronavirus-led economic woes exert downside pressure on the AUD/USD prices. Further, the US NAHB Housing Market Index ended four months of declines in September, rising 1 point to 76. The same join the mixed bag of the US statistics to amplify uncertainties over the Federal Reserve’s (Fed) next move as policymakers were hawkish during their latest approach.

Given the recently mixed sentiment challenging the AUD/USD bears, the pair traders will wait for the clear direction from RBA Minutes, while also keeping eyes on the macro. Although the RBA policymakers are likely to reiterate their cautious optimism after extending the bond purchase program with tapering, challenges to monetary policy tightening stay intact, which if uttered may weigh on the quote.

Technical analysis

A convergence of 20-DMA and 50-DMA, around 0.7335-40, challenges the corrective pullback from one-month-old horizontal support near 0.7220.