- AUD / USD struggled to hold its intraday gains to four-day highs amid a sustained buy in the USD.
- The optimistic US economic outlook and a sudden rebound in US bond yields propped up the dollar.
- A solid bounce in US equity futures helped limit the downside to the perceived riskier Australian.
The pair AUD/USD It fell around 20-25 pips from the four-day highs and was last seen trading in neutral territory, around the 0.7630-35 region during the early days of the American session.
After an initial drop to the 0.7615 region, the pair regained some positive traction on the first day of a new trading week and built on the recovery move at the start of the session from near the yearly lows. The rally, however, lacked a strong follow-up and petered out amid the sustained buying of US dollars.
The USD remained high near four-month highs and remained well supported by the optimistic US economic outlook, bolstered by the impressive pace of coronavirus vaccination. Added to this optimism was the approval of a massive stimulus package and expectations of an additional $ 3.0 trillion infrastructure spending plan.
Apart from this, a sudden spike in US Treasury yields further sustained the dollar and put some pressure on the AUD / USD pair. That said, a solid rally in US equity futures helped limit deeper losses for the Aussie perceived as riskier, at least for now, warranting some caution for bearish traders.
That said, the inability of the AUD / USD pair to capitalize on the positive intraday move suggests that the recent slide may still be far from over. A subsequent dip below the daily swing lows will reaffirm the bearish outlook and make the pair vulnerable to falling towards the horizontal support at 0.7580-75.
There is no major market-moving economic data released in the US on Monday. Therefore, US bond yields will play a key role in influencing USD price dynamics. This, coupled with the broader market risk sentiment, will provide some boost to the AUD / USD pair and produce some short-term trading opportunities.
Technical levels
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