- A positive sentiment benefits the AUD and helps the AUD / USD gain traction.
- Sustained buying around the USD limits any further gains and leads to some selling at higher levels.
- The optimistic US economic outlook and rising US bond yields continue to prop up the USD.
The pair AUD / USD has returned all your initial earnings to one-week highs and has fallen to fresh daily lows, around the 0.7625 region, during the European session on Tuesday.
After the two-way moves of the previous day, the pair has managed to gain some positive traction on Tuesday and has built on its recent rebound from near the yearly highs. A generally positive risk tone has been seen as a key factor offering some support to the higher perceived risk Australian dollar. Nevertheless, sustained buying around the US dollar has limited any potential rise, causing new sales to higher levels.
The USD has soared to four-and-a-half-month highs and remains supported by the optimistic outlook for the US economy. Investors have remained optimistic about the prospects for a relatively faster US economic recovery from the pandemic, bolstered by the impressive pace of coronavirus vaccination, the passage of a massive stimulus package, and the expectations of an additional $ 3 trillion infrastructure spending plan of the Biden Administration.
Apart of this, a new boost in US Treasury yields has provided an additional boost to the USD. In fact, the yield on the 10-year US government bond has once again approached the 1.75% level, at one-year highs hit earlier this month. This has been seen as another factor that has helped limit the gains in the AUD / USD pair, possibly setting the stage for the resumption of the previous downward move.
Market participants are now awaiting the US economic calendar, highlighted by the release of the Conference Board consumer confidence index. This, along with US bond yields, will influence USD price dynamics. Investors could follow the signs of the broader market risk sentiment to seize some short-term opportunities around the AUD / USD pair.
AUD / USD technical levels
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