AUD/USD: Vulnerable to further downside around 0.7700 as greenback bulls get stronger

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  • AUD/USD matches Friday’s closing at weekly open, stays depressed near one-month low.
  • US Senate passes President Joe Biden’s $1.9 trillion stimulus during weekend.
  • American employment data came in strong, China’s trade figures also impressive.
  • Light calendar keeps risk catalysts, bond moves on the driver’s seat.

AUD/USD begins the trading week near Friday’s close of 0.7695, around early-February low, during the initial Monday morning in Asia. In doing so, the pair traders await fresh clues to extend the previous week’s south-run as the US dollar strength got extra support from Friday’s employment figures and weekend news of the US coronavirus (COVID-19) stimulus while the latest trade data from China favors Aussie bulls.

US jobs, covid relief package propel greenback bulls…

As if Friday’s 1379K Nonfarm Payrolls from the US, versus nearly 200K expected, wasn’t enough for the US dollar bulls, the upward revision to the headline data and decline in Unemployment Rate to 6.2% offered extra strength to the US currency.

Also on the positive side, though yet to respond, is the passage of US President Biden’s $1.9 trillion stimulus by the Senate with 50-49 votes. The “American Rescue Plan Act” will now be discussed in the House and is likely to be voted on Tuesday.

While the US Treasury yields portrayed a bit of pullback during late Friday, the overall strength of the bond bears kept favoring the US dollar bulls. However, Wall Street’s strong gains and weekend data from China, suggesting a 60% rally in the headlines Trade Balance (USD terms), during January and February, seem to test AUD/USD sellers off-late.

Given the lack of major data/events up for release during Monday’s Asian session, AUD/USD traders should keep their eyes on the US Treasury yields, currently around a 13-month high.

In doing so, the pair traders shouldn’t miss out on the risk catalysts expected to favor the bond bears, like hopes of further fund inflow building reflation as well as covid and vaccine updates.

Technical analysis

A decisive downside break of 50-day EMA and an ascending trend line from November, respectively around 0.7705 and 0.7775, keep AUD/USD sellers towards an 11-week-old support line, at 0.7641 now.

 

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