AUD/USD nears two-week highs above 0.7750 amid US-China optimism

• AUD/USD cheers upbeat Biden-Xi phone call.
• Positive comments on Australia’s economy also supportive.
• DXY suffers from weak US CPI, as the focus shifts to jobless claims.

AUD/USD is on a steady recovery mode towards two-week tops of 0.7756, having found some solid support around the 0.7715 region.

The aussie stalled the overnight decline and caught a fresh bid after the Australian Treasury Secretary Kennedy voiced positive comments on the economic recovery during his testimony to a Senate committee.

"Australia's economy is recovering faster than expected, Kennedy said, adding that it's a consumption-led recovery. 

Further, the highly-anticipated phone call between US President Joe Biden and China’s President Xi Jinping added credence to the renewed upside int the spot.

The Biden-Xi talks were mainly positively by the markets, indicative goodwill and mutual respect, which lifted the risk sentiment and capped the recovery in the safe-haven US dollar across its main peers.

The sentiment around the greenback was also undermined by the bleak US CPI data and dovish comments from the Fed Chairman Jerome Powell. Powell reiterated Wednesday that the central bank’s new policy framework could accommodate annual inflation above 2% while noting that that focus remains on employment.

Meanwhile, holiday-thinned light trading combined with US stimulus hopes also offer support to the higher-yielding aussie. The focus now shifts towards the US weekly jobless claims and sentiment on Wall Street for further trading directives.

AUD/USD technical levels

FXStreet’s Analyst Haresh Menghani explained, “the lack of strong follow-through buying warrants some caution for bullish traders. This makes it prudent to wait for a sustained move beyond the overnight swing highs, around the 0.7755 region, before positioning for any further appreciating move. On the flip side, the mentioned trend-line resistance breakpoint, currently around the 0.7715 region, might act as immediate support. This is closely followed by the 0.7700 round-figure mark.”

AUD/USD additional levels