- Sustained USD selling allowed AUD/USD to gain traction for the second straight session on Monday.
- Concerns about the economic impact from surging COVID-19 cases capped the upside for the major.
- Investors now look forward to the US Durable Goods Orders for some impetus ahead of the FOMC.
The AUD/USD pair shot to four-day tops during the Asian session, albeit retreated few pips thereafter. The pair was last seen hovering around the 0.7765 region, still up 0.30% for the day.
The pair kicked off the new week on a positive note and built on the previous session’s goodish rebound of over 70 pips from sub-0.7700 levels. This marked the second consecutive day of a positive move and was sponsored by the prevalent bearish sentiment surrounding the US dollar.
The USD dropped to the lowest level since early March amid diminishing odds for an earlier than anticipated Fed lift-off. Investors seem convinced that any spike in inflation is likely to be transitory and that the Fed will keep interest rates near zero levels for a longer period.
Apart from this, a generally positive risk tone was seen as another factor that weighed on the safe-haven greenback and provided an additional lift to the perceived riskier aussie. Even signs of stability in the US Treasury bond yields did little to lend any support to the USD.
That said, concerns that surging COVID-19 infections in some countries could derail the global economic recovery from the pandemic capped gains for the AUD/USD pair. Investors also seemed reluctant to place aggressive bullish bets ahead of the latest FOMC policy update on Wednesday.
Hence, it will be prudent to wait for some strong follow-through buying beyond the 0.7800 round-figure mark before positioning for any further appreciating move. Market participants now look forward to the US Durable Goods Orders data for some impetus later during the early North American session.
The US macro data, along with the US bond yields might influence the USD price dynamics and provide some impetus to the AUD/USD pair. Apart from this, the broader market risk sentiment should allow traders to grab some short-term opportunities.
Technical levels to watch
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