- AUD / USD finds some support near the 0.7335 region on Monday amid prevailing risk appetite in the markets.
- Optimistic expectations from the Fed continue to prop up the USD and limit any further bullish movement in the pair.
- Investors are now waiting for this week’s major macroeconomic releases for further directional momentum.
The pair AUD/USD has managed to recover around 20-25 pips from the lows of a week and a half reached during the Asian session on Monday, trading at time of writing near the daily highs just above the 0.7350 region.
Despite concerns about the fast-spreading Delta variant and a global economic slowdown, prevailing risk appetite has offered some support to the Aussie of higher perceived risk. This, in turn, has been seen as a key factor that has helped the AUD / USD pair to find some support near the 0.7335 region on the first day of a new week. Having said that, a strong pickup in US dollar demand could prevent pair bulls from opening aggressive positions and limit any additional gains for the pair.
In fact, the US Dollar DXY Index has spiked to two-week highs during the first half of trading action on Monday. amid expectations of an imminent Fed announcement later this year. Market speculation was further fueled by comments from Philadelphia Fed Chairman Patrick Harker on Monday, who joined a chorus of authorities eager to cut $ 120 billion in monthly bond purchases. This, coupled with the recent rally in US Treasury yields, has acted as a tailwind for the USD.
The yield on the US 10-year government bond rose again near the 1.35% level on Friday following the release of the US IPP producer price index. The PPI posted the largest gain since November 2010 and indicated that higher inflation could persist for some time. Therefore, the focus is now on the latest CPI consumer inflation figures in the United States, to be released on Tuesday.
Apart from this, investors will also turn their attention this week to important Chinese data, Australian employment details and monthly US retail sales figures. Data will now play a key role in influencing the AUD / USD pair ahead of the crucial FOMC monetary policy meeting in September 2021. Meanwhile, price dynamics around the USD and broader risk sentiment in the The market could generate some business opportunities in the absence of relevant economic data releases on Monday.
AUD / USD technical levels to be observed
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