AUD/USD off multi-month highs, below 0.7400 amid cautious optimism

AUD/USD extends pullback from the highest levels since September reached at 0.7408 earlier in the Asian session, as the US dollar pauses its declines across the board.

The souring risk sentiment could be associated with the rebound in the US dollar while the latest drop in the S&P 500 futures also exerts downside pressure on the aussie. Markets continue to assess the economic recovery expectations induced by the coronavirus vaccine progress.

Meanwhile, escalating Australian-Sino trade tensions also limit the upside in the aussie. Australian Trade Minister Simon Birmingham said Monday, they are considering a World Trade Organization (WTO) appeal against China’s decision to impose tariffs on barley imports from the OZ nation.

Investors also turn cautious ahead of the Reserve Bank of Australia's (RBA) Governor Phillip Lowe’s speech and monetary policy decision due on Tuesday. Also, of note remains that the Australian Q3 GDP report and US NFP data due later this week.

However, the AUD buyers remain hopeful amid upbeat official Chinese Manufacturing and Services PMIs, which suggested that economic recovery in the world’s second-biggest economy is gaining traction. Note that China is Australia’s top export destination.

AUD/USD technical levels

“Unless declining back below 0.7345/40 area, comprising highs marked between mid-September and November 17, AUD/USD bulls can keep July 2018 top surrounding 0.7485 on the radar,” Anil Panchal, FXStreet’s Analyst explained.

AUD/USD additional levels