AUD/USD climbs back closer to four-week tops touched on Monday

The AUD/USD pair built on its steady intraday ascent and climbed to the 0.7365 region, back closer to four-week tops during the early part of the European session.

The pair attracted some dip-buying on Tuesday and now looks to build on last week's breakout through the 0.7315-20 horizontal resistance zone. The uptick was exclusively sponsored by a modest US dollar weakness, though lacked bullish conviction and warrants some caution before positioning for any further appreciating move.

Expectations that the Fed remains on track to begin rolling back its massive pandemic-era stimulus and the possibility for an interest rate hike in 2022 should act as a tailwind for the greenback. This, along with a generally softer risk tone, might hold investors from placing aggressive bullish bets around the perceived riskier aussie.

Investors remain worried that the recent surge in crude oil/energy prices could stoke inflation. This comes on the back of signs of a slowdown in the global economic recovery and has been fueling concerns about stagflation. Apart from this, fears of a spillover from China Evergrand's debt crisis took its toll on the global risk sentiment.

From a technical perspective, acceptance above the 0.7315-20 resistance breakpoint favours bullish traders and supports prospects for additional gains. Some follow-through buying beyond the overnight swing highs, around the 0.7375 region, will reaffirm the positive outlook and allow push the AUD/USD pair to aim back to reclaim the 0.7400 mark.

Market participants now look forward to the US economic docket, featuring the release of JOLTS Job Openings data. This, along with a scheduled speech by Fed Governor Richard Clarida, will influence the USD. Traders might further take cues from the broader market risk sentiment for some short-term trading opportunities around the AUD/USD pair.

Technical levels to watch