- AUD/USD gained some strong positive traction on Monday amid the upbeat market mood.
- The USD retreated further from three-week tops and remained supportive of the move up.
- Worsening US-China relations might keep a lid on any strong rally for the China-proxy aussie.
The intraday USD selling bias picked up pace in the last hour and lifted the AUD/USD pair to fresh session tops, around the 0.6470-80 region.
Having shown some resilience near the 0.6400 round-figure mark, the pair caught some aggressive bids on Monday and was being supported by a strong risk-on rally across the global equity markets. The global risk sentiment remained well supported by the latest optimism over the easing of lockdown restriction in some parts of the world and got an additional boost from hopes for additional stimulus.
The upbeat mood undermined the US dollar's perceived safe-haven demand and turned out to be one of the key factors that provided a strong lift to perceived riskier currencies, including the aussie. The USD extended the Friday's intraday pullback from three-week tops and seemed rather unimpressed by the Fed Chair Jerome Powell's optimistic comments about the US economy over the weekend.
It, however, remains to be seen if the pair is able to capitalize on the momentum or runs into some fresh supply at higher levels amid mounting fears over the second wave of coronavirus infections. This coupled with worsening US-China relations might further hold investors from placing any aggressive bullish bets around the China-proxy Australian dollar and cap gains for the AUD/USD pair.
Even from a technical perspective, the pair is likely to confront resistance near the top end of a one-week-old descending trend-channel, which coincides with 100-day SMA important pivotal point. In the absence of any major market-moving economic releases, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move.
Technical levels to watch
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