AUD/USD climbs to fresh 10-day highs above 0.7200

• AUD/USD pushed higher after breaking above 0.7200 on Monday.
• USD remains under selling pressure amid slumping T-bond yields.
• Reserve Bank of Australia will release August Meeting Minutes on Tuesday.

After spending the first half of the day in a relatively tight range below 0.7200, the AUD/USD pair gained traction during the American session and rose to its highest level in 10 days at 0.7228. As of writing, the pair was up 0.63% on a daily basis at 0.7216.

DXY slumps below 93.00

The broad-based selling pressure surrounding the USD seems to be fueling AUD/USD’s rally in the last hours. The US Dollar Index (DXY), which stayed relatively quiet near 93.00 at the start of the week, turned south pressured by falling US Treasury bond yields. At the moment, the DXY is down 0.3% on the day at 92.80 and the 10-year US T-bond yield is losing more than 4%.

Meanwhile, US Commerce Secretary Wilbur Ross told Fox Business Network that China was buying large amount of US agricultural products ahead of the phase-one trade deal review. However, the US Commerce Department also announced that it added 38 Huawei facilities to the US’ economic blacklist, reviving concerns over a further escalation in US-China relations.   

In the early trading hours of the Asian session on Tuesday, the Reserve Bank of Australia (RBA) will release the July Meeting Minutes. On Friday, RBA Governor Philip Lowe noted that an intervention to lower the AUD’s exchange rate would not be a successful strategy but said that they have not ruled out negative rates despite the fact that it’s extremely unlikely.

Technical levels to watch for