- AUD / USD gains some traction on Monday and marks a modest rebound from multi-week lows.
- A good rally in US stock index futures provides support for the perceived riskier AUD.
- The optimistic expectations of the Hawkish Fed and nervousness about Covid-19 benefit the USD and should limit the rise.
The pair AUD/USD moves higher at the start of the European session on Monday and remains close to the daily highs, around the region of 0.7250.
After have found some support near the 0.7325 area, the AUD / USD pair has gained some positive traction on Monday and has recovered a portion of the previous day’s losses to the lowest level since October 6. The rebound is due to a good rally in US stock index futures and it appears unaffected by the prevailing bullish sentiment around the US dollar. That being said, it is likely that pair rise remains limited amid return of COVID-19 restrictions in Europe.
Austria said it would be the first Western European country to reimpose a complete lockdown to tackle rising infections and Germany He also warned that he could follow suit. This, along with optimistic expectations from the Fed, should continue to act as a tailwind for the USD safe haven and cap gains for the AUD / USD pair. This, in turn, warrants some caution before confirming that the recent decline is over and starting to open new bullish positions.
In fact, markets have been valuing the Possibility of an eventual Fed rate hike by July 2022 and Fed fund futures indicate a high probability of another rate hike for November amid mounting inflationary pressures. Speculation was further fueled by comments from Fed Governor Christopher Waller, who said the US central bank should accelerate the pace of tightening to give more room for maneuver to raise interest rates.
Looking ahead, Monday’s economic calendar in the United States presents the only release of existing home sales data at the start of the American session. This, coupled with US bond yields, could influence USD price dynamics and provide some boost to the AUD / USD pair. Investors will take more cues from the broader market risk sentiment to seize some short-term opportunities around the pair.
AUD / USD technical levels
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