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  • AUD/USD Gained some traction on Monday, albeit lacked any strong follow-through.
  • Friday’s upbeat NFP report, rising US bond yields continued underpinning the USD.
  • The price action suggests that the recent AUD/USD downtrend might be far from over.

The AUD/USD pair retreated around 30-55 pips from daily swing highs and refreshed daily lows, around the 0.7685 region during the early European session.

The pair managed to gain some positive traction on the first day of a new trading week and built on its modest recovery from one-month lows, around the 0.7620 region touched on Friday. Stronger-than-expected Chinese trade balance data was seen as a key factor that extended some support to the China-proxy Australian dollar.

The uptick, however, lacked any strong follow-through and remained capped amid sustained US dollar buying interest. The USD stood tall near three-month tops and remained well supported by the prospects for a relatively faster US economic recovery from the pandemic, which was reinforced by Friday’s upbeat US monthly jobs report.

Meanwhile, the US Senate voted in favour of US President Joe Biden’s $1.9 trillion pandemic aid package and sparked another sell-off in the US fixed income market. This, in turn, pushed the yield on the benchmark 10-year US bond back closer to one-year tops, which was seen as another factor that underpinned the greenback.

Apart from this, reports of attacks on Saudi Arabian oil production facilities weighed on investors’ sentiment and further collaborated to keep a lid on any gains for the perceived riskier aussie. This further suggests that the near-term bearish bias might still be far from being over and warrants caution for bullish traders.

There isn’t any major market-moving US economic data due for release on Monday. Hence, the US bond yields will continue to play a key role in influencing the USD price dynamics. Traders would also take cues from the broader market risk sentiment in order to grab some short-term trading opportunities around the AUD/USD pair.

Technical levels to watch