AUD/USD returns intraday gains to multi-month high and falls back towards 0.6800

  • AUD/USD starts the week on a positive note and hits a new monthly high.
  • A combination of factors is helping to reignite demand for the USD and limiting the pair’s upside.
  • Traders look to the US ISM services PMI to get a bit of a boost ahead of the RBA on Tuesday.

The pair AUD/USD has risen to its highest level since August 13 on the first day of a new week, although it has struggled to capitalize on the move beyond 0.6850. The pair paring some of its intraday gains and pulling back towards the 0.6800 level during the first half of the European session.

A combination of factors is helping the US dollar to recover modestly from the five-month lows hit on Monday, which in turn is acting as a headwind for the AUD/USD pair. The concern about a deeper global economic recession casts a shadow over the latest optimism about the easing of COVID-19 restrictions in China. This is revealed in a generally softer tone around stock markets, which drives some safe-haven money flows into the USD and weighs on the perceived riskier Aussie. Apart from this, an intraday rally in US Treasury yields offers some support for the dollar.

The US monthly employment report (NFP) released on Friday and a surprise rise in wages point to a further increase in inflationary pressures. The data validates Fed Chairman Jerome Powell’s forecast that the maximum interest rate will be higher than expected and suggest that the US central bank will continue to tighten its monetary policy. This, in turn, is seen pushing US Treasury yields higher. That said, recent comments from several FOMC officials support the prospects for relatively minor rate hikes from the US central bank, which could limit dollar gains.

Traders may also refrain from positioning for a deeper corrective pullback for AUD/USD as attention now turns to Tuesday’s Reserve Bank of Australia (RBA) meeting. Ahead of the key central bank event, the US ISM services PMI could give the AUD/USD pair some lift later during the American session on Monday. This, coupled with US bond yields and broader risk sentiment, will influence USD price dynamics and help create near-term opportunities around AUD/USD.

AUD/USD technical levels

AUD/USD

Overview
Last price today 0.6811
Today I change daily 0.0007
Today’s daily change in % 0.10
today’s daily opening 0.6804
Trends
daily SMA20 0.6677
daily SMA50 0.65
daily SMA100 0.6688
daily SMA200 0.6924
levels
previous daily high 0.6836
previous daily low 0.6742
Previous Weekly High 0.6845
previous weekly low 0.664
Previous Monthly High 0.6801
Previous monthly minimum 0.6272
Daily Fibonacci of 38.2% 0.6778
Daily Fibonacci of 61.8% 0.68
Daily Pivot Point S1 0.6752
Daily Pivot Point S2 0.67
Daily Pivot Point S3 0.6658
Daily Pivot Point R1 0.6846
Daily Pivot Point R2 0.6888
Daily Pivot Point R3 0.694

Source: Fx Street

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