AUD/USD drops towards 0.7700 while consolidating biggest weekly gains of 2021


  • AUD/USD looks for clear direction after Friday’s losses tested heavy run-up on the weekly basis.
  • Market sentiment stays positive amid upbeat US data and a lack of negatives from home.
  • Opening of trans-Tasman travel bubble contrasts geopolitical tensions, virus/vaccine headlines.
  • No major data/events at home can keep the pair at the mercy of risk catalysts.

AUD/USD wavers around 0.7730, keeping Friday’s downbeat performance, as markets in Asia begin the week’s trading on early Monday. Although the quote refrains from extending the latest consolidation below the 0.7700 threshold, the aussie pair’s recent moves fail to copy the heaviest weekly gains since early November 2020.

Bulls catch a breather despite risk-on mood…

The US economic numbers, housing and consumer sentiment being the latest, have been strong enough to keep traders hopeful while opening up the Australian economy also flash positive signs for the market. Also on the upbeat side could be the travel-bubble restart between Australia and New Zealand starting from Monday.

Additionally, vaccinations stand on the hike as the latest updates from the US suggest that half of Americans have at least got one jab of the coronavirus (COVID-19). It’s worth mentioning that unconfirmed rumors over the US Republicans’ readiness to back the smaller infrastructure spending plan also test the market optimism.

Even so, the covid woes are troubling Europe and India as the virus resurgence becomes stronger and pushes governments toward recalling lockdowns in the key cities and states. Furthermore, the US-China and the America-Russia tussles add worries to the market sentiment as geopolitical tension is harmful to the global economy that is yet to overcome the pandemic.

Amid these plays, Wall Street remains strong and so do prices of gold. However, the US 10-year Treasury yields remain troubled despite the latest recovery moves. As a result, the US dollar index (DXY) stays heavy around a one-month low.

Moving on, the AUD/USD pair traders have fewer catalysts from the domestic calendar, neither from the US, which in turn highlights the covid updates and geo-political news for fresh impulse. That said, the bulls have hopes until the US dollar bounces off.

Technical analysis

Although failures to cross multiple levels marked since January 22, around 0.7770, triggered AUD/USD pullback, 50-day SMA near 0.7720 and the previous resistance line from February 25, around 0.7630, become the key supports to watch.

 



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