AUD/USD sits near 2-1/2 month tops, comfortably above mid-0.6600s

• AUD/USD turns higher for the third straight session amid some renewed USD weakness.
• A sudden pickup in the shared currency prompted some fresh selling around the buck.
• Concerns about escalating US-China tensions kept a lid on any strong gains for the pair.

The AUD/USD pair maintained its bid tone through the mid-European session and was last seen trading comfortably above mid-0.6600s, just below 2-1/2-month tops set earlier this Wednesday.

Following an early dip to the 0.6630 area, the pair regained traction and turned higher for the third consecutive session amid the emergence of some fresh US dollar selling pressure. The greenback struggled to preserve its early gains, instead witnessed an intraday turnaround amid some aggressive buying around the shared currency.

This coupled with the prevalent upbeat market mood, as depicted by some follow-through strength in the global equity markets, extended some additional support to perceived riskier currencies, including the aussie. The risk sentiment remained well supported by the latest optimism about a potential COVID-19 vaccine and hopes of a quick global economic recovery.

The pair shot to an intraday high level of 0.6680, albeit once again failed ahead of the March monthly swing highs. Concerns about a further escalation in diplomatic tensions between the United States and China held investors from placing any aggressive bullish bets and kept a lid on any additional gains for the AUD/USD pair.

It is worth recalling that the US President Donald Trump on Tuesday promised a strong reaction to China's planned national security law for Hong Kong and added that it would be announced by the end of the week. China was quick to retaliate and threatened countermeasures against any US actions, including sanctions.

There isn't any major market-moving US economic data due for release on Wednesday. Hence, it will be prudent to wait for a convincing break through the 0.6680-85 supply zone before traders start positioning for any further near-term appreciating move for the AUD/USD pair.

Technical levels to watch

AUD/USD