AUD/USD clings to gains but lacks strong follow-through

Haresh Menghani FXStreet

• Heavy USD selling helps regain positive traction at the start of a new week.
• Positive copper prices/subdued US bond yields remain supportive of the up-move.
• Four-day-old trading range holds ahead of this week’s important release – NFP.

The AUD/USD pair started the new week on front-foot, albeit now seemed struggling to build on the positive momentum.

The pair opened with a minor bullish gap on Monday and touched an intraday high level of 0.7581. A weaker US Dollar, primarily led by a goodish rebound in the shared currency amid easing Italian political jitters, was seen as one of the key factors behind the pair's uptick.

This coupled with modest gains in copper prices, which tends to underpin demand for the commodity-linked Australian Dollar, and a subdued action around the US Treasury bond yields helped the pair to recover all of its losses posted on Friday.

Further gains, however, remained capped as traders refrained from placing aggressive bets amid holiday-thinned liquidity conditions, with the pair quickly reversing around 10-pips from session tops to currently trade around 0.7570 area.

In absence of any major market moving economic releases, the pair seems more likely to continue with its consolidative price-action within a four-day-old trading range ahead of this week's important release of the US monthly jobs report (NFP).

Technical levels to watch

Immediate resistance is pegged near the 0.7600 handle, above which the pair is likely to aim towards testing its next hurdle near the 0.7645-50 supply zone. On the flip side, 0.7540 level might continue to act as an immediate support, which if broken could drag the pair back towards retesting the key 0.7500 psychological mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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