- AUD / USD gains some positive traction Tuesday amid some profit-taking around the USD.
- The pullback in US bond yields and risk appetite sentiment weigh on the safe-haven USD.
- The bulls can wait for a move above the 0.7720 area before opening new positions.
The pair AUD/USD has risen to new daily highs during the European session on Tuesday, with the bulls now looking to build on the upside move above the 0.7700 level.
The pair has starred a nice rally from the 0.7620 region, at new one-month lows hit earlier this Tuesday, and has been supported by a combination of factors. The US dollar has seen some profit taking from the three and a half month highs, which has been seen as a key factor that has lent some support to AUD / USD.
U.S. Treasury Secretary Janet Yellen said Monday that America’s massive stimulus package would provide enough resources to fuel an economic recovery very strong American. Yellen further added that there are tools to deal with inflation, leading to a modest decline in yields of US bonds and weighed on the USD.
Apart of this, underlying bullish sentiment in stock markets has further weighed on the safe-haven US dollar and benefited the Australian dollar higher perceived risk. That said, the optimistic US economic outlook should help limit USD losses and limit the AUD / USD rally.
Investors have remained optimistic about the prospects for a relatively faster US economic recovery amid the impressive COVID-19 vaccination rate. The narrative of a strong economic recovery has been bolstered by the impressive US NFP jobs report for February released last Friday.
Therefore, it will be prudent to wait for some solid continuation buying, above the 0.7720 resistance zone, before confirming that the recent corrective decline is over. This, in turn, will lay the groundwork for the resumption of the previous strong bullish trajectory of the AUD / USD pair.
In the absence of major economic releases from the US, US bond yields will continue to play a key role in influencing USD price dynamics. This, coupled with the broader market risk sentiment, could generate some significant trading opportunities around the AUD / USD pair.
AUD / USD technical levels
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