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  • AUD bulls rescued, as Treasury yields recede, USD takes a breather.
  • Covid concerns weigh on the risk appetite, data docket remains light.
  • AUD/USD not out of the woods yet, technicals point south.

AUD/USD is seeing a dead cat bounce on the 0.7700 level, having found strong bids around the 0.7690 region earlier in the Asian session.

The rebound in the aussie can be mainly attributed to a pause in the US dollar upsurge, as the Treasury yields reverse gains across the curve.

The retracement in the US yields could be triggered by the tepid market mood, in the wake of growing coronavirus cases globally. However, expectations of a bigger US fiscal stimulus from Biden’s presidency keeps the downside cushioned in the yields.

The recent surge in treasury yields made the Australian dollar less attractive as an alternative higher-yielding asset. Further, the sentiment around the aussie was also undermined by resurfacing US-Sino concerns, this time concerning the Taiwan issue.

Looking ahead, the sentiment on Wall Street and Treasury yields price action could direct the aussie pair amid a light data docket this Monday.

AUD/USD technical levels

The 1H chart suggests more losses amid trendline breakdown, bearish crossover. The bearish crossover also adds credence to the renewed downside, as the 50-HMA seems to have just pierced the 100-HMA from above. Any bounce could meet strong offers at the 200-HMA barrier at 0.7722.

AUD/USD additional levels