AUD/USD is trading on its front foot so far this Tuesday with spot prices higher by about 0.2% intraday. The Australian Dollar is strengthening broadly on the back of solid economic data out of China, which could encourage wait-and-see RBA policy.

AUD/USD PRICE CHART: DAILY TIME FRAME (20 MAY TO 15 SEP 2020)

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Gains notched by spot AUD/USD since bouncing off the 0.7200-price level last week highlights this confluent zone of resistance-turned-support. Also, the Aussie-Dollar continues to generally hold its positively sloped 20-day moving average, which could help sustain the broader bullish trend. This brings potential for a retest of technical resistance underpinned by the 31 August swing high at the 0.7400-handle into focus.

AUD/USD PRICE CHART WITH VIX INDEX OVERLAID: DAILY TIME FRAME (DEC 2019 TO SEP 2020)

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The Australian Dollar might remain in favor relative to its safe-haven USD peer so long as trader risk appetite remains intact and expected market volatility stays relatively subdued. AUD/USD price action could face headwinds, however, if sentiment sours and causes the S&P 500 VIX Index to rise materially.

Nevertheless, the next direction of AUD/USD stands to be strong-armed by the upcoming Federal Reserve interest rate decision. The FOMC decision is scheduled to cross-market wires this Wednesday, 16 September at 18:00 GMT, which will be accompanied by updated economic projections and a follow-up press conference spearheaded by Fed Chair Jerome Powell.