- AUD / USD draws some buying near the 0.7700 level and spikes to a month-long high on Monday.
- Lowering expectations of a Fed rate hike and falling US bond yields weigh on the USD and support the pair’s upward move.
- Technical buying above the 0.7750-60 region further contributes to the strong intraday bullish move.
The pair AUD/USD has built on its strong positive intraday movement and has soared to new one-month highs, around the 0.7785 region, during the first half of the European session on Monday.
After the fall of the day before and an initial drop near the 0.7700 level, the pair regained positive traction on Monday and has been supported by a broad-based sell around the US dollar. Investors continue to lower their expectations of an earlier-than-expected Fed rate adjustment, despite positive US economic data. This has been seen as one of the key factors that have been weighing on the US dollar for the last week or so.
The growing market confidence that the Fed will keep interest rates near zero for a longer period has been evident by the recent decline in US Treasury yields In fact, the benchmark 10-year US government bond yield plunged to 1.5280% last week, around 25 basis points from a 14-month high of 1,776% hit in March. This has been seen as another factor that has further contributed to pushing money flows away from the US dollar.
In the meantime, a slight deterioration in global risk sentiment has offered no support or given any respite to the safe-haven US dollar. Investors have become cautious amid renewed fears about another dangerous wave of coronavirus infections globally. However, the risk-off mood has done little to reduce demand for the higher perceived risk Aussie or stall the strong positive intraday movement of the AUD / USD pair to the highest level on March 18.
Apart from the general weakness of the USD, the rally could also be attributed to some technical buying following a sustained move above the 0.7750-60 region. So it remains to be seen whether the strong bullish move is supported by genuine buying or turns out to be a stop-loss jump move amid the absence of relevant economic releases from the US.
AUD / USD technical levels
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