AUD/USD struggles to hold above 0.5800 ahead of PMI data
- US Dollar Index clings to small gains above 102.
- Fed looks to reassure markets by announcing open-ended QE.
- Commonwealth Bank's Manufacturing PMI is expected to fall to 50.
After slumping to 0.5720 area during the European trading hours, the AUD/USD pair gained traction and advanced to a daily high of 0.5842 boosted by the strong selling pressure surrounding the greenback. However, the dismal market mood made it difficult for the pair to preserve its bullish momentum. As of writing, the pair was trading at 0.5792, down 0.1% on a daily basis.
USD valuation drives pair's action
In the early American session, the US Dollar Index (DXY) dropped below the 102 handle after the Federal Reserve announced that it launched an open-ended quantitative easing program to confront disruptions to the economic activity.
Commenting on this development, “the Fed is doing its best to kill the USD, but we are not convinced that it will work (yet)," Norde analysts said. "Once economies open up post the Corona-crisis, the USD will get hammered, but that is still not something to discuss for the next weeks.”
However, with the US Senate Republicans' coronavirus bill failing to get enough votes to clear the first procedural hurdle, the risk-aversion took control of the market action and allowed the USD to start erasing its losses. At the moment, the DXY is up 0.55% on the day at 102.50.
On Tuesday, the Commonwealth Bank's Manufacturing, Composite and Business PMI figures from Australia will be looked upon for fresh impetus. Markets expect the Manufacturing PMI reading to fall to 50 in March's preliminary reading.
Later in the day, the Markit Manufacturing PMI and the ISM Manufacturing PMI will be featured in the US economic docket.
Technical levels to watch for