• Return of Australia's incumbent government was seen as a positive trigger.
• US-China trade tensions/RBA rate cut speculations seemed to cap gains.
• The focus now shifts to Powell's speech and RBA policy meeting minutes.
The AUD/USD pair built on the weekly bullish gap and is currently placed at the top end of its daily trading range, comfortably above the 0.6900 handle.
After last week's slump to the lowest level since early January, the pair opened with a bullish gap at the start of a new trading week in reaction to a surprise election victory for the country's conservative government. Return of the incumbent government was seen as giving a bit of a stimulus to spending power on the back of their promised tax cuts, which was cited as a positive trigger for bullish traders.
The uptick, however, lacked any strong follow-through and remained capped amid persistent worries over US-China trade tensions, which had been one of the key factors weighing on the China-proxy Australian Dollar. This coupled with growing bets for an eventual RBA rate cut might further collaborate towards capping any runaway rally for the major, at least for the time being.
Hence, the focus now shifts to the upcoming release of RBA monetary policy meeting minutes, which will be preceded by the Fed Chair Jerome Powell's scheduled speech during the Asian session on Tuesday. In the meantime, the broader market risk sentiment and the US Dollar price dynamics might now influence the momentum amid absent relevant market moving economic releases.
Technical levels to watch
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