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Major currencies are mostly little changed on the day going into Europe currently. The aussie got a bit of a knock earlier, with AUD/USD falling to 0.7701 as China suspends a key economic dialogue between the two countries amid the ongoing geopolitical rift.
But the pair has recovered a little trade at 0.7730-40 as it nears a test of its key hourly moving averages @ 0.7734-55 once again. The 200-hour moving average @ 0.7755 also played a part in keeping gains in-check so that will be one to watch before 0.7800.
US futures are keeping little changed after the mixed session yesterday, with tech stocks having slumped towards the latter stages. The Dow closed at a record high, benefiting from rotation flows as the market continues to fixate on the inflation narrative.
A good opportunity that may present itself would be a buy-the-dip play in the pound in case there is a combo of dovish events i.e. BOE holding back on taper talk and being less hawkish in general, and SNP winning a majority.
We may not see a pullback come immediately upon those risk events playing out but it will be good to identify key risk levels and the potential for a rebound in the quid as long as the fundamental undertones stay as they are in the bigger picture.
Besides that, I’m still a fan of the loonie and getting in on dips as well although after the move in the past two weeks, there might be some propensity for a pullback.
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