AUD/USD rebounds from weekly lows as US dollar loses strength

• US dollar pulls back across the board, favors AUD/USD rebounds.
• Pair finds support at 20-day SMA, holds a bearish bias.

The AUD/USD trimmed losses during the American session and climbed to 0.7688, after falling on European hours to 0.7658, the lowest level since January 4. Price action is limited on Monday amid a holiday in the US.

The US dollar failed to hold to gains and pulled back. The DXY approached 91.00 earlier and now is eyeing the daily as it trades near 90.75. Wall Street futures are mixed after Friday’s slide, keeping the AUD/USD’s recovery limited.

Better-than-expected Chinese economic data did not help commodity currencies earlier on Monday. Market participants remain cautious ahead of Biden’s inauguration, looking at developments regarding the stimulus package, coronavirus cases and the US Treasury market.

Short-term outlook

The AUD/USD is trading slightly above the 20-day moving average.  A close clearly below 0.7680 would point to more weakens ahead. The bias points to the downside in the very short-term, but some consolidation seems likely before another run lower. A recovery above 0.7735 would alleviate the bearish pressure.

The next strong support stands at 0.7640 that if reach could trigger a rebound;; if broken a test of 0.7600 seems likely.

Technical levels