- AUD/USD once again managed to find some support near the 0.7600 mark.
- A solid rebound in the equity markets extended some support to the aussie.
- A goodish pickup in the USD demand capped any strong gains for the major.
The AUD/USD pair struggled to capitalize on its goodish intraday bounce from the vicinity of the 0.7600 mark and quickly retreated over 25 pips from daily tops. The pair was last seen trading around the 0.7635-40 region, nearly unchanged for the day.
Having found some support ahead of one-month lows touched last Thursday, the pair gained some traction on the first day of a new trading week amid a goodish rebound in the US equity futures. The retail-inspired pressure on hedge funds now seems to have shifted towards silver, which, in turn, eased pressure on equity markets. This was seen as a key factor that benefitted the perceived riskier aussie.
That said, a pickup in the US dollar demand – supported by doubts about the timing and size of the US fiscal stimulus – kept a lid on any meaningful upside for the AUD/USD pair. In fact, a group of Republican senators urged the US President Joe Biden to cut the $1.9 trillion price tag on his proposed COVID-19 stimulus package and reportedly floated a $600 billion alternative to garner bipartisan support.
Meanwhile, fading hopes for rapid approval of additional US economic stimulus was evident from the ongoing decline in the US Treasury bond yields. This might hold the USD bulls from placing aggressive bets and help limit the downside for the AUD/USD pair, warranting some caution before positioning for any further decline.
That said, a sustained break below the 0.7600-0.7590 region will be seen as a fresh trigger for bearish traders and set the stage for an extension of the recent corrective slide from multi-year tops. Market participants now look forward to the release of the US ISM Manufacturing PMI for some short-term opportunities.
Technical levels to watch
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