AUD/USD refreshes weekly tops, around 0.7740 region
|- AUD/USD attracted some follow-through buying for the second consecutive session on Wednesday.
- The prevalent risk-on mood weighed on the safe-haven USD and remained supportive of the uptick.
- Positive US bond yields might extend some support to the buck and cap further gains for the major.
The AUD/USD pair edged higher through the early European session on Wednesday and shot to fresh weekly tops, around the 0.7740 region in the last hour.
The pair managed to regain positive traction for the second consecutive session and recovered further from two-week lows, around the 0.7660-55 region touched on Monday. The underlying bullish sentiment in the financial markets was seen as a key factor that undermined the safe-haven US dollar and benefitted the perceived riskier Australian dollar.
Against the backdrop of the optimism over the rollout of COVID-19 vaccines, the global risk sentiment was further supported by hopes for additional US fiscal stimulus measures. It is worth reporting that the market has been pricing in the prospects for more aggressive fiscal spending in 2021 under Joe Biden's presidency.
US Treasury Secretary nominee Janet Yellen further lifted market expectations during her confirmation hearing on Tuesday and urged lawmakers to act big on the COVID-19 fiscal package. The developments helped offset concerns about the ever-increasing coronavirus cases and the imposition of stricter lockdown measures.
Meanwhile, the increasing likelihood of larger government spending continued lending some support to the US Treasury bond yields. Investors also seemed to have turned cautious ahead of the President-elect Joe Biden's inaugural ceremony. This, in turn, might limit the USD downside and cap any meaningful gains for the AUD/USD pair.
This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move amid absent relevant market moving economic releases. That said, the broader market risk sentiment will play a key role in influencing the AUD/USD pair ahead of the Australian monthly employment details on Thursday.
Technical levels to watch
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