• The prevalent USD selling bias helped build on last week’s goodish up-move.
• Surging iron ore prices further underpinned Aussie and remained supportive.
• Lack of progress in US-China trade talks capping ahead of Tuesday’s RBA minutes.
The AUD/USD pair maintained its strong bid tone through the mid-European session, albeit has retreated few pips from over two-week tops set earlier today.
The pair built on last week's goodish up-move and caught some aggressive bids at the start of a new trading week amid a follow-through US Dollar selling bias. Despite a goodish rebound in the US Treasury bond yields, the USD bulls held on the defensive in wake of the recent disappointing US economic data and turned out to be one of the key factors driving the pair higher.
Adding to this, improving global risk sentiment further dented the greenback's relative safe-haven status and drove flows towards perceived riskier currencies. This coupled with surging iron ore prices provided an additional boost to the commodity-linked Aussie and remained supportive of the pair's positive move for the sixth session in the previous seven.
However, a lack of visible progress in the US-China trade talks and the recent softness in Chinese manufacturing data failed to provide any meaningful impetus to the China-proxy Australian Dollar and kept a lid on any strong follow-through/runaway rally for the major.
In absence of any major market moving economic releases from the US, the pair seems more likely to enter a bullish consolidation phase as the focus now shifts to the release of minutes from the latest RBA monetary policy meeting, which might provide some meaningful impetus for the major.
Technical levels to watch
Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The 4 hours chart shows that the pair was unable to surpass its 200 SMA, but also that it remains above the 20 and 100 SMA, with the shortest maintaining its upward strength. Technical indicators in the mentioned chart, hold in positive ground, with the Momentum advancing but the RSI retreating, anyway keeping the risk skewed to the upside. Further gains seem likely on a break above the daily high, yet sustainable progress is not yet clear.”
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