AUD/USD consolidates around 0.6900 after snapping four-day losing streak

AUD/USD retraces from Monday’s high to 0.6910 amid the early Tuesday morning in Asia. Even so, the Aussie pair keeps the broad recovery moves from the previous day’s low of 0.6811. While a bit of risk reset could be cited supportive to the quote’s recent positive performance, broad US dollar weakness also gains a chance to get added to the list of catalysts amid an easy start to the week.

A welcome start to the week…

Despite the biggest jump in the Texas hospitalization, not to forget the hike in the coronavirus (COVID-19) inside Florida, global markets witnessed a bit of risk-on during Monday. The reason could be traced from receding numbers from Beijing as well as US President Donald Trump’s steps back from Xinjiang sanctions. Also supporting the mood could be the news of a $1 trillion infrastructure spending plan. However, the latest headlines from Reuters suggesting the US increasing hardships for Chinese media could renew the US-China tussle.

Against this backdrop, Wall Street closed with mild gains whereas the US 10-year treasury yields also ended Monday on a positive note around 0.70%.

Other than the market’s welcome performance, broad US dollar weakness could also be traced for the AUD/USD pair’s run-up. The greenback seems to have taken a hit amid worries of the second wave of the pandemic in the US amid mixed housing and Chicago Fed National Activity Index. In doing so, the US currency gauge versus the majors, namely the US dollar index (DXY), reversed from three weeks high to defy the previous four-day rise.

Furthermore, RBA Governor Philip Lowe's appreciation of the Australia economics and refrain from rate cuts offered additional support to teh Aussie pair on Monday.

Looking forward, the Commonwealth Bank of Australia will release its June month preliminary activity data around 23:00 GMT on Monday. The headline Manufacturing PMI is expected to recover from 44 to 49.4 whereas its Services counterpart might weaken from 26.9 to 25.7.

In addition to the Aussie PMI data, the Sino-American headlines and virus updates will be the key for the risk-barometer AUD/USD pair during Tuesday’s Asian session.

Technical analysis

A sustained break above 10-day SMA and a two-week-old resistance line keep the bulls hopeful. As a result, the pair’s gradual recoveries towards 0.7000 can’t be ruled out. On the other hand, the quote’s declines below 0.6890 resistance-turned-support will have to get validated by a 21-day SMA level of 0.6840.