After initial mild weakness, the AUD/USD pair gained some fresh traction and built on Friday’s recovery move to move back above the key 0.75 psychological mark resistance.
Currently trading around 0.7505-10 region, testing session tops, the pair moved higher on the first trading day of the week and shrugged-off persistent greenback buying interest, with the key US Dollar Index holding with minor gains around the 99.00 handle.
With today’s move lacking any fundamental driver, the pair’s sharp recovery to three day tops could be attributed to some position readjustment ahead of tomorrow’s Chinese Manufacturing PMI and RBA monetary policy decision announcement.
It, however, remains to be seen if the pair is able to extend the short-covering move or runs through some fresh supply at higher level amid positive tone surrounding the US treasury bond yields, led by growing Fed rate-hike expectations, and which tends to drive flows away from higher-yielding currencies – like the Aussie.
Later during the day, the US treasury secretary Mnuchin’s speech, followed by the US macro data – Core PCE price index and ISM manufacturing PMI would now be looked upon for some fresh impetus.
Technical levels to watch
Immediate resistance is pegged near 0.7525-30 area, above which a fresh bout of short-covering could lift the pair back towards the very important 200-day SMA hurdle near 0.7555 region ahead of 50-day SMA barrier near 0.7590-95 area.
On the downside, retracement back below 0.7490 level, leading to a subsequent drop below 0.7470-65 horizontal support, might turn the pair vulnerable to break through 3-month lows support near 0.7445-40 area and aim towards testing the 0.7400 handle.