- AUD / USD is struggling to find direction on Monday.
- The US Dollar DXY Index remains in negative territory near 90.30.
- The main Wall Street indices seem to open sharply lower.
The pair AUD/USD made over 100 pips last week and has retained its bullish momentum at the beginning of the week. After uploading to its best level in almost three years at 0.7908 at the start of the Asian session on Monday, the pair has lost its traction. At the time of writing, the pair remains positive around 0.7885.
In the absence of important macroeconomic data releases, market optimism has provided a boost to the AUDrisk-sensitive, during Asian business hours. With market sentiment worsening ahead of the American session, AUD / USD has started to pull back. At the moment, S&P 500 futures are down 0.75% on the day, suggesting that major US stock indices are likely to open sharply lower.
On the other hand, until now the US dollar is having difficulty capitalizing on safe haven cash flows and allows the AUD / USD to stay in positive territory. The US Dollar DXY Index is shedding 0.13% on the day at 90.25. Meanwhile, the yield on the US 10-year Treasury has risen more than 2% and the USD could start to outperform the AUD in the second half of the day if yields continue to rise.
The release of the Chicago Fed National Activity Index and Dallas Fed Manufacturing Index data will be included in the US economic calendar on Monday.
AUD / USD technical perspective
“Upside surprises in dividend announcements from Australian mining companies, which tend to advertise in USD and offer payouts in AUD, and the prospect of even higher dividends later in the year” help the AUD to further strengthen, according to Westpac analysts.
“AUD / USD has now clearly broken out of our expected range of 0.76 to 0.78, even as the USD holds its own ground,” analysts have noted. “Any drop back to 0.7750 / 75 should remain very well supported, with a move to 0.80 being the short term target.”
AUD / USD additional technical levels
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