AUD/USD steadily climbs back to 0.7700 mark, fresh session tops

AUD/USD gained some positive traction on Tuesday amid some USD profit-taking.
Retreating US bond yields and the risk-off mood weighed on the safe-haven buck.
Bulls might still wait for a move beyond the 0.7720 area before placing fresh bets.
The AUD/USD pair refreshed daily tops during the early European session, with bulls now looking to build on the intraday ascent further beyond the 0.7700 mark.

The pair staged a goodish rebound from the 0.7620 region, or fresh one-month lows touched earlier this Tuesday and was supported by a combination of factors. The US dollar witnessed some profit-taking from three-and-half-month tops, which was seen as a key factor lending some support to the AUD/USD.

US Treasury Secretary Janet Yellen said on Monday that a massive US stimulus package would provide enough resources to fuel a very strong US economic recovery. Yellen further added that there are tools to deal with inflation and led to a modest pullback in the US bond yields and undermined the USD.
Apart from this, the underlying bullish sentiment in the financial markets further weighed on the greenback’s safe-haven status and benefitted the perceived riskier aussie. That said, the upbeat US economic outlook should help limit the USD losses and cap the upside for the AUD/USD pair.

Investors remained optimistic about the prospects for a relatively faster US economic recovery amid the impressive pace of COVID-19 vaccinations. The narrative of a strong sequential economic recovery was reinforced by the stunning US monthly jobs report for February released last Friday.

Hence, it will be prudent to wait for some strong follow-through buying, beyond the 0.7720 supply zone, before confirming that the recent corrective fall has run its course. This, in turn, will set the stage for the resumption of the AUD/USD pair’s previous strong bullish trajectory.

In the absence of any major market-moving economic releases from the US, the US bond yields will continue to play a key role in influencing the USD price dynamics. This, along with the broader market risk sentiment, will produce some meaningful trading opportunities around the AUD/USD pair.

Technical levels to watch