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  • AUD/USD fades bounce off intraday low, lacklustre following Friday’s declines.
  • Traders seek fresh catalysts amid a light calendar, empty feeds.
  • Fears of fresh US-China tussles, covid woes in Asia and Fed tapering stop buyers from entering.

AUD/USD remains subdued around 0.7730, teasing an intraday low of 0.7725, during Monday’s Asian session. The pair dropped the previous day amid the broad US dollar rebound but a lack of major directives during the weekend, as well as a light calendar in Asia, trouble the traders of late.

The week began on a cautious note after the US cited three members of China’s Wuhan laboratory hospitalized during November 2019 as the same suggesting another round of Sino-American tussles over the virus outbreak. Also negatively affecting the risk catalysts, as well as the AUD/USD prices, could be the airplane hijacking in Belarus and fears of coronavirus (COVID-19) Indian strain. Also on the same line could be Iran’s rejection to renew the three-month access to the International Atomic Energy Agency (IAEA) to inspect images of their nuclear facilities.

During Friday, upbeat PMI figures pushed some more of the US Federal Reserve (Fed) officials to convey reflation fears and the need to discuss tapering. The chatters weighed on market sentiment and put a safe-haven bid under the US dollar.

Amid these plays, Reuters said, “Australia’s central bank will likely lag its peers in tightening monetary policy even though the country has been among the most successful in handling the pandemic and has emerged from its COVID-related economic slump with strong growth momentum,” which in turn could keep AUD/USD pressured. Additionally, a 5% drop in Dalian Iron Ore prices adds to the AUD/USD woes.

Against this backdrop, S&P 500 Futures print 0.30% intraday gains while the US 10-year Treasury yields drop one basis point to 1.623% by the press time.

Looking forward, risk catalysts will be the key for near-term AUD/USD moves. Among them, comments from the Fed policymakers and covid headlines, not to forget US-China news, should be closely observed for fresh impulse.

Technical analysis

Although bearish MACD and sluggish Momentum keep AUD/USD sellers hopeful, 50-day and a three-week-old support line, respectively around 0.7715 and 0.7700, become immediate strong barriers to the downside. It should, however, be noted that the bulls also have 0.7820 as a tough nut to crack. Hence, the pair’s moves between 0.7820 and 0.7700 seem less interesting. It’s worth noting the pair forms a bearish head-and-shoulders chart pattern that needs confirmation by a daily closing below 0.7710.