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  • AUD/USD struggled to preserve its intraday gains to four-day tops amid sustained USD buying.
  • The upbeat US economic outlook, a sudden pick up in the US bond yields underpinned the USD.
  • A solid bounce in the US equity futures helped limit the downside for the perceived riskier aussie.

The AUD/USD pair retreated around 20-25 pips from four-day tops and was last seen trading in the neutral territory, around the 0.7630-35 region during the early North American session.

Following an early dip to the 0.7615 region, the pair regained some positive traction on the first day of a new trading week and built on the previous session’s recovery move from the vicinity of YTD lows. The uptick, however, lacked any strong follow-through and ran out of steam amid sustained US dollar buying.

The USD stood tall near four-month tops and remained well supported by the upbeat US economic outlook, bolstered by the impressive pace of coronavirus vaccination. Adding to the optimism was the passage of a massive stimulus package and expectations for an additional $3.0 trillion infrastructure spending plan from the US.

Apart from this, a sudden pick up in the US Treasury bond yields further underpinned the greenback and exerted some pressure on the AUD/USD pair. That said, a solid recovery in the US equity futures helped limit any deeper losses for the perceived riskier aussie, at least for now, warranting some caution for bearish traders.

That said, the AUD/USD pair’s inability to capitalize on the intraday positive move suggests that the recent downfall might still be far from being over. A subsequent slide below the daily swing lows will reaffirm the bearish outlook and turn the pair vulnerable to slide back towards the 0.7580-75 horizontal support.

There isn’t any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will play a key role in influencing the USD price dynamics. This, along with the broader market risk sentiment, will provide some impetus to the AUD/USD pair and produce some short-term trading opportunities.

Technical levels to watch