The AUDUSD pair has surpassed the 0.6400 level as investors anticipate increased policy assistance from China, leading to a further boost in recovery.

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• AUD/USD stretches recovery above 0.6400 as investors see more policy support coming from China.

The pair currently trades last at 0.64211.

The previous day high was 0.648 while the previous day low was 0.6416. The daily 38.2% Fib levels comes at 0.6441, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.6456, expected to provide resistance.

The AUD/USD pair extends its recovery above the round-level resistance of 0.6400 in the European session. The Aussie asset manages to challenge the downside bias as investors hope for fresh policy support from the Chinese authority to diminish threats of an economic slowdown prompted by the vulnerable housing sector and poor household demand.

S&P500 futures post some gains in London, portraying an improvement in the risk appetite of the market participants. Nominal improvement in the risk-taking capability of investors is fragile amid rising deflation risks in China. Overall market sentiment is still bearish and has supported US Treasury yields. The returns offered on 10-year US Treasuries jumped to 4.30%.

A sense of optimism among investors has stemmed from expectations of more supportive fiscal policy from the Chinese government, which looks set to deliver a weak growth rate in the July-September quarter. Investment banking firm Morgan Stanley lowered its forecast of China’s Gross Domestic Product (GDP) for the current year to 4.7% vs. an earlier projection of 5.0%.

Policymakers in a Cabinet meeting on Wednesday said China would continue to introduce policies to boost consumption and promote investment, following mounting economic woes with a prolonged property crisis, deflationary pressure, and slower growth in retail sales and industrial output, reported Reuters. The Australian Dollar as a proxy to China’s economic growth capitalizes on the announcement.

Meanwhile, the US Dollar Index (DXY) delivers a lackluster performance after printing a fresh two-month high around 103.60. The strength in the US Dollar came after Federal Reserve (Fed) policymakers remained cautious about significant upside risks to inflation due to upbeat consumer spending and wage growth.

Technical Levels: Supports and Resistances

AUDUSD currently trading at 0.6417 at the time of writing. Pair opened at 0.6424 and is trading with a change of -0.11 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 0.6608, 50 SMA 0.6688, 100 SMA @ 0.6675 and 200 SMA @ 0.6737.

The previous day high was 0.648 while the previous day low was 0.6416. The daily 38.2% Fib levels comes at 0.6441, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.6456, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.64, 0.6375, 0.6335
• Pivot resistance is noted at 0.6464, 0.6505, 0.6529

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