AUD/USD struggles for direction, stuck in a range around 0.7700 mark
|- AUD/USD was seen oscillating in a range through the early European session on Monday.
- The prevalent risk-on environment extended some support to the perceived riskier aussie.
- A modest USD strength held bulls from placing fresh bets and capped any meaningful gains.
The AUD/USD pair lacked any firm directional bias and seesawed between tepid gains/minor losses, around the 0.7700 mark through the early European session.
A combination of diverging forces failed to provide any meaningful impetus to the AUD/USD pair and led to a subdued/range-bound price action on the first day of a new trading week. This comes on the back of the previous session's dramatic turnaround from two-and-half-week tops and favours bearish traders.
The underlying bullish sentiment in the financial markets – as depicted by an extended rally in the global financial markets – acted as a tailwind for the perceived riskier aussie. That said, a modest US dollar strength largely offset the supporting factor and capped the upside for the AUD/USD pair.
The USD consolidated Friday's strong move up to one-week tops amid expectations that the Fed might begin the discussion on tapering its asset purchases in the wake of rising inflationary pressures. It is worth recalling that the pace of inflation in the US climbed to a 13-year high in May.
This, along with signs of stability in the US Treasury bond yields, forced investors to lighten their bearish USD bets ahead of the FOMC policy meeting this week. Nevertheless, the fundamental backdrop might hold traders from placing aggressive bullish bets around the AUD/USD pair, at least for now.
There isn't any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will continue to play a key role in influencing the USD price dynamics. Apart from this, the broader market risk sentiment might further provide some impetus to the AUD/USD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.