AUD/USD retreats to 0.7050 area, clings to modest daily gains

• AUD/USD lost its bullish momentum after climbing above 0.7070.
• US Dollar Index is staging a technical rebound in American session. 
• Wall Street’s main indexes register strong gains on Monday.

The AUD/USD pair started the new week on a strong footing and climbed to a daily high of 0.7074 but struggled to preserve its bullish momentum. As of writing, the pair was still up 0.4% on the day at 0.7054.

DXY recovers slightly, stays in the negative territory

A modest rebound witnessed in the US Dollar Index (DXY) seems to be capping AUD/USD’s upside in the early American session. The DXY, which dropped to a daily low of 94.15, is currently losing 0.25% at 94.34. However, this move seems to be a technical correction amid a lack of significant fundamental drivers.

The only data from the US showed on Monday that the business activity in Texas’ manufacturing sector expanded at a stronger pace in September than it in August but was largely ignored by the market participants.

Meanwhile, the risk-on market environment is helping the risk-sensitive AUD show some resilience against the greenback. Reflecting the upbeat mood, Wall Street’s main indexes are up between 1.4% and 1.7% on Monday.

There won’t be any macroeconomic data releases featured in the Australian economic docket on Tuesday and the USD’s market valuation is likely to continue to impact AUD/USD’s movements.

Technical levels to watch for