AUD/USD clings to recovery gains near session tops, around 0.7080-85 area
|- AUD/USD gained some positive traction and built on the overnight bounce from two-month lows.
- Improving global risk sentiment undermined the safe-haven greenback and remained supportive.
- Coronavirus jitters, a pickup in the US bond yields might limit the USD slide and cap the upside.
The AUD/USD pair edged higher through the early European session and was last seen trading near the top end of its daily trading range, around the 0.7080-85 region.
The pair built on the previous day's late rebound from the 0.7015 region, or over two-month lows and gained some positive traction on the last trading day of the week. A softer tone surrounding the US dollar was seen as one of the key factors that extended some support and assisted the AUD/USD pair to snap four consecutive days of the losing streak.
A modest recovery in the equity markets prompted some USD profit-taking from two-month tops and benefitted the perceived riskier Australian dollar. The global risk sentiment got a minor boost from the overnight reports, indicating that Democrats in the US House of Representatives are working on a $2.2 trillion coronavirus stimulus package.
Meanwhile, the risk-on flow pushed the US Treasury bond yields higher. This, along with concerns about the second wave of coronavirus infections and the likelihood of the global economic slowdown, could help revive the USD demand. This, in turn, might keep a lid on any further gains for the AUD/USD pair, warranting some caution for bullish traders.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the recent corrective slide from YTD tops is already over. Market participants now look forward to the release of the US Durable Goods Orders data, which might influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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