- A combination of factors helps AUD / USD attract some buying near the 0.7700 level.
- The current pullback in US bond yields weighs on the USD and offers some support to the pair.
- A slight recovery in global risk sentiment further benefits the higher perceived risk AUD.
The pair AUD/USD climbs into the region of new daily highs, around the region of 0.7745 during the European session and closes the bearish weekly opening gap.
The pair one more time has managed to find decent support near the 0.7700 level and, for now, it appears to have halted its retracement from the monthly highs touched in reaction to the pessimistic statement from the FOMC last week. The intraday rally of around 45 pips has been supported by a combination of factors, although it lacks bullish conviction and it runs the risk of shutting down fairly quickly.
The performance of the The benchmark 10-year US government bond has extended its recent pullback from highs of more than a year and has not helped the US dollar capitalize on its intraday gains. Turkish President Tayyip Erdogan’s decision to replace a central bank governor has sparked fears about other asset classes and fueled some safe-haven money flows into the USD.
However, the initial market reaction has turned out to be short-lived. This has been evident by a positive rally in US equity futures, which has provided additional boost to the Australian dollar higher perceived risk. That said, the prospects for a relatively faster US economic recovery could continue to prop up the dollar and limit any significant rally for the AUD / USD pair.
This makes it prudent expect some solid follow-on purchases before confirming that the recent decline is over and positioning for any further bullish movements. Market participants are now awaiting the US economic calendar, which features the release of US existing home sales data to build some momentum at the start of the US session.
However, the key focus of attention will be on Fed Chairman Jerome Powell’s comments during an online event and scheduled speeches from influential FOMC members. This, along with US bond yields and overall market risk sentiment, will play a key role in influencing USD price dynamics and generating some significant opportunities around the AUD / USD pair.
AUD / USD technical levels
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