“¢ A subdued USD price action remains supportive of the positive momentum.
“¢ A strong rally in Dalian iron ore provides an additional boost to the Aussie.
“¢ Technical buying above 0.7100 mark further accelerates the bullish trajectory.
The AUD/USD pair caught some aggressive bids at the start of a new trading week and built on the momentum further beyond the 0.7100 handle.
After last week’s sharp intraweek pull-back, the pair regained positive traction on Friday and was being supported by some renewed US Dollar selling bias amid a fresh leg of a downfall in the US Treasury bond yields.
With the USD bulls holding on the defensive, the prevalent risk-on mood underpinned the perceived riskier currency – Aussie and helped the pair to extend the positive momentum through the Asian session on Monday.
Adding to this, strong gains of nearly 2% in Dalian iron ore provided an additional boost to the commodity-linked Australian Dollar and remained supportive of the strong bid tone surrounding the major.
Meanwhile, possibilities of some near-term stops being triggered, leading to some fresh technical buying on a sustained move above the 0.7100 mark further contributed the ongoing bullish trajectory.
There isn’t any major market-moving economic data due for release on Monday and hence, a move towards challenging 50-day SMA, currently near the 0.7135 region, now looks a distinct possibility.
Technical levels to watch
On a sustained move beyond the mentioned hurdle is likely to accelerate the up-move further towards the 0.7160-65 horizontal resistance, above which the pair is likely to aim towards reclaiming the 0.7200 handle. On the flip side, the 0.7100-0.7095 region now becomes immediate support to defend, which if broken might prompt some long-unwinding trade and drag the pair back towards testing the 0.7065-60 support area.
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