• AUD/USD builds on last week’s late bounce and gains traction for the second straight day.
  • Retreating US bond yields, a positive risk tone undermines the USD and extends support.
  • Recession fears might cap the risk-sensitive aussie ahead of the US CPI report on Tuesday.

The AUD/USD pair catches some bids for the successive straight day on Monday and builds on last week's bounce from sub-0.6700 levels or the lowest since July 14. This also marks the third day of a positive move in the previous four and lifts spot prices to a more than one-week high, closer to the 0.6900 mark during the mid-European session.

A combination of factors force the US dollar to prolong its recent sharp pullback from a two-decade high, which, in turn, is seen lending support to the AUD/USD pair. The markets already seem to have priced in a supersized 75 bps rate hike by the Federal Reserve at the next policy meeting on September 20-21. Furthermore, a modest downtick in the US Treasury bond yields seems to weigh on the greenback.

Apart from this, a generally positive tone around the equity markets further undermines the safe-haven buck and benefits the risk-sensitive aussie. That said, growing recession fears, amid the prospects for a faster policy tightening by major central banks and economic headwinds stemming from fresh COVID-19 curbs in China could cap optimism. This, in turn, warrants some caution for bullish traders.

Investors might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of the latest US consumer inflation figures, due for release on Tuesday. The crucial US CPI report for August will play a key role in influencing the Fed's policy outlook. This will drive the USD demand in the near term and help determine the next leg of a directional movement for the AUD/USD pair.

In the meantime, spot prices are more likely to consolidate in a range amid absent relevant market-moving economic releases from the US on Monday. That said, the US bond yields, along with the broader risk sentiment, might provide some impetus to the greenback and allow traders to grab short-term opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price 0.6878
Today Daily Change 0.0034
Today Daily Change % 0.50
Today daily open 0.6844
 
Trends
Daily SMA20 0.6874
Daily SMA50 0.6896
Daily SMA100 0.6969
Daily SMA200 0.7116
 
Levels
Previous Daily High 0.6877
Previous Daily Low 0.6745
Previous Weekly High 0.6877
Previous Weekly Low 0.6699
Previous Monthly High 0.7137
Previous Monthly Low 0.6835
Daily Fibonacci 38.2% 0.6827
Daily Fibonacci 61.8% 0.6795
Daily Pivot Point S1 0.6766
Daily Pivot Point S2 0.669
Daily Pivot Point S3 0.6634
Daily Pivot Point R1 0.6899
Daily Pivot Point R2 0.6954
Daily Pivot Point R3 0.7031

 

 

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