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  • Aussie bounces in tandem with risk, S&P 500 futures.
  • US dollar sees a pause in its relief rally ahead of US CPI.
  • Rebound in yuan and gold also offer support to the AUD.

The AUD/USD pair catches a fresh bid in the European session, in the wake of an improvement in the risk sentiment, which capped the broad-based US dollar recovery.

Expectations of robust US banks’ Q3 earnings results seem to lift the market mood, weighing negatively on the safe-haven greenback. The shift in the risk tone can be reflective of a rebound in the futures tied to the US stocks.

At the time of writing, the aussie battles 0.7200, having extended the bounce from 0.7165 low while S&P 500 futures erase losses to trade flat around 3,530. Meanwhile, the US dollar index fades the recovery to 93.27, now trading at 93.13.

Meanwhile, a recovery in the yuan as well as in gold collaborates with the uptick in the commodity-currency, the aussie. The Chinese currency slumped 2% on Monday after the People’s Bank of China (PBOC) intervened over the weekend to curb the yuan’s rally.

The spot fell sharply below 0.7200 earlier in the Asian session after the risk-off flows crept in on reports that Johnson and Johnson had paused its coronavirus vaccine trial after a patient complaint of an unexplained illness. The major failed to benefit from a surprise jump in Chinese imports.

Attention now turns towards the US CPI release and latest updates on fiscal stimulus for near-term trading incentives.

AUD/USD: Technical levels

FXStreet’s Analyst Anil Panchal explains, “The bears are currently targeting 0.7150/45 support confluence that comprising 100-bar SMA and an upward sloping trend line from September 25. Though, weak RSI conditions might challenge the AUD/USD bears afterward. On the contrary, 200-bar SMA and a falling trend line from September 01, respectively near 0.7225 and 0.7240, will challenge the AUD/USD bulls.”

AUD/USD: Additional levels