AUD / USD rises to four-day highs, just below 0.7300 amid weaker USD

• AUD / USD gained tracking traction for the third consecutive session on Monday.
• The current decline in the USD retracement was seen as a key factor driving the pair higher.
• A combination of factors could limit the rise ahead of the RBA’s decision on Tuesday.

The pair AUD/USD It rose to four-day highs during the middle of the European session, and the bulls are now aiming to rebound and take advantage of the momentum beyond 0.7300.

The pair built on last week’s solid bounce from the 0.7170 region, or more from month-long lows, and gained traction for the third straight session on Monday. The bulls took cues from the current decline in the US dollar retracement from the one-year highs, although a combination of factors could contain any significant gains for the AUD / USD pair.

Concerns that the Evergrande Group debt crisis could spread throughout China’s real estate sector dampened investors’ appetite for perceived riskier assets. This was evident from a generally weaker tone in equity markets. This could provide some support to the safe haven dollar and act as a headwind for the perceived riskier Australian dollar.

Aside from this, firm expectations that the Fed would start to reduce its bond purchases from November and raise interest rates in 2022 should help limit losses in US dollars. This makes it prudent to wait for a strong follow-up buy before placing aggressive bullish bets around the AUD / USD pair amid the absence of relevant macroeconomic data on market movement.

Even from a technical perspective, the AUD / USD has repeatedly failed in the 0.7310-15 offering zone. This further justifies some caution for bull traders ahead of the RBA’s monetary policy update on Tuesday. Traders could also refrain from positioning themselves in a firm direction, as the focus remains on Friday’s monthly US employment report.

Technical levels