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  • AUD/USD attracted some dip-buying on Monday, though any strong move up seems elusive.
  • The upbeat US economic outlook, weaker risk tone should underpin the USD and cap gains.

The AUD/USD pair traded with a mild positive bias through the first half of the European session and was last seen hovering near four-day tops, just below mid-0.7600s.

Following an early slide to the 0.7615 region, the pair attracted some dip-buying and is now looking to build on the previous session’s goodish rebound from the vicinity of YTD lows. That said, a combination of factors might hold bulls from placing aggressive bets and keep a lid on any meaningful upside for the AUD/USD pair.

The US dollar held steady near four-month tops amid the prospects for a relatively faster US economic recovery from the pandemic. The impressive pace of coronavirus vaccinations and the passage of a massive stimulus package have been fueling the optimistic outlook for the US economy, which should continue to underpin the USD.

Apart from this, a weaker trading sentiment around the US equity was seen as another factor that might benefit the safe-haven greenback and collaborate to cap gains for the perceived riskier aussie. This, in turn, suggests that any further positive move might still be seen as an opportunity to initiate fresh bearish positions.

In the absence of any major market-moving economic releases from the US, the AUD/USD pair remains at the mercy of the USD price dynamics and the broader market risk sentiment. This makes it prudent to wait for some strong follow-through buying before confirming that the recent corrective pullback from multi-year tops has run its course.

Technical levels to watch