- The prevailing optimistic sentiment in the market extends some support to AUD / USD on Monday.
- Rising US bond yields revive demand for the USD and limit the pair’s rise.
The pair AUD/USD lacks a firm directional bias on Monday and remains trapped within a range around the 0.7670-80 region at the start of the European session.
A combination of divergent factors has not helped the pair to take advantage of Friday’s strong positive move to one-week highs and has led to moderate and range-bound price action on the first day of a new week. The prevailing optimistic sentiment in the market has driven some money flows towards the Australian dollar, of higher perceived risk, while a modest pickup in demand for the US dollar has limited gains significant for the AUD / USD pair.
Progress in coronavirus vaccines it has continued to fuel hopes for a strong global economic recovery. This, coupled with the increasing likelihood of a massive fiscal stimulus plan in the US, has further boosted investor confidence. This has been evident by the current rally in the stock markets, which in turn has extended some support and helped limit the decline in the AUD / USD pair.
Meanwhile, expectations of increased government borrowing to finance the stimulus They have pushed the yield on the 10-year US government bond to a high of nearly a year. Continued rise in Treasury yields has helped reignite demand for the US dollar, which, in turn, has prevented the pair’s bulls from opening new positions, considered a key factor that has limited any strong positive movement for the AUD / USD pair.
There is no major economic data release from the United States on Monday. Additionally, this makes it prudent to wait for a sustained breakout of the intraday trading range before positioning in a firm direction. Meanwhile, overall market risk sentiment, coupled with US bond yields, could sway the USD and lead to some trading opportunities around the AUD / USD pair.
AUD / USD technical levels
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