AUD/USD eases from 1-week tops, fails ahead of 0.7200 mark

• A combination of factors assisted AUD/USD to gain traction for the second straight session.
• The USD remained on the defensive amid the uncertainty over the US fiscal stimulus plans.
• The upbeat market mood provided an additional boost to the perceived riskier aussie dollar.

The AUD/USD pair climbed to over one-week tops during the Asian session, albeit lacked any strong follow-through and remained below the 0.7200 round-figure mark.

The pair built on the previous session’s modest uptick and gained some follow-through traction for the second consecutive session on Monday, also marking its third day of a positive move in the previous four. The prevalent US dollar selling bias, coupled with the upbeat market mood remained supportive of the bid tone surrounding the AUD/USD pair.

The USD remained depressed in the wake of the impasse over the next round of the US fiscal stimulus measures. It is worth reporting that the US Congress suspended talks for the COVID-19 stimulus package and left for a month-long recess on Thursday. This, in turn, concerns about the US economic recovery from the damage caused by the pandemic.

Meanwhile, the risk-on mood further underpinned the perceived riskier Australian dollar and provided an additional boost to the AUD/USD pair. The global risk sentiment remained well supported by the latest optimism over a potential vaccine for the highly contagious coronavirus diseases and the postponement of the US-China trade deal review.

The meeting was originally scheduled for Saturday and the delay leaves the phase one deal intact, at least for now, which provided an additional boost to the China-proxy aussie. Despite the supporting factors, the AUD/USD pair struggled to move back above the 0.7200 mark, warranting some caution before placing aggressive bullish bets.

Market participants now look forward to the US economic docket, highlighting the release of the Empire State Manufacturing Index. The data might influence the USD price dynamics and produce some short-term trading opportunities. The key focus, however, will remain on the scheduled release of the FOMC meeting minutes on Wednesday.

Technical levels to watch