AUD/USD: Bulls keep 0.7200 on radar as US dollar weakness continues

• AUD/USD stays on the front foot near the mid-0.7100 area, carries Friday’s recovery moves for the second-day.
• US dollar extends weakness to two-year low amid looming uncertainty over the fiscal package, rising virus cases.
• Wall Street flashed mild gains, Gold surged to record high.
• RBA’s Kent showed readiness to buy bonds to maintain a 0.25% yield target.

AUD/USD takes rounds to 0.7150 at the start of Tuesday’s Asian session. The pair again attacks the late Monday’s double-top surrounding 0.7151 in the attempt to refresh a monthly top of 0.7196, marked the previous day. In doing so, the quote is on the way to register fourth consecutive monthly gain to revisit highs marked in late-February and April months of 2019.

A lack of fresh catalysts pushed market players to extend the previous bearish bias for the US dollar. The same helped commodities and antipodeans to keep the strength whereas equities also cheered hopes of further stimulus amid mixed data from the US.

Old tunes, fresh song…

Amid the same story of greenback weakness, AUD/USD managed to refresh the highest levels since April 2019 on Monday. The US currency keeps bearing the burden of policymakers’ inability to agree over the much-awaited fiscal plan after their European counterparts pleased marked with a huge package the previous week.

The US Senators said to have recently stuck upon the unemployment claims benefits that are to expire soon while the size of the total aid, Democrats favor $3.5 trillion contrasts to Republicans’ proposal of $1.0 trillion, also remain as the key hurdle. US Senate Majority Leader Mitch McConnell said on Monday Senate Republicans will shortly introduce a new coronavirus relief program.

Other than the policy deadlock, coronavirus (COVID-19) also hurt the world’s largest economy as there are over 4.0 million cases that together describe the wave 2.0 of the pandemic. New cases in Australia’s Victoria are also on the surge but the pace of hike becomes minimal compared to America.

Additionally, the US-China tension and the lack of uniformity in American economics are also reasons behind the greenback’s latest fall.

Against this backdrop, Wall Street benchmarks marked gains whereas the US 10-year Treasury yields also rose over two basis points (bps) to 0.615% by the end of Monday.

Looking forward, a light calendar pushes the pair traders to stretch the previous bullish bias. However, the buyers seem to step back off-late and may allow the bears’ entry in a case of any USD-positive news.

It’s worth mentioning that the RBA’s Assistant Governor Christopher Kent cited odds of further bond purchasing to maintain the 0.25% yield target, which in turn may offer a pullback to the AUD/USD prices.

Technical analysis

While 0.7200 becomes the immediate upside target, 0.7210 becomes the validation point for the quote’s run-up towards February 2019 top surrounding 0.7300. Alternatively, Friday’s bottom and June month’s top together offer 0.7065/60 as the key support.