AUD/USD attacks 0.7400 amid USD rebound, shrugs off hawkish RBA
- AUD/USD remains heavy as US dollar tracks yields higher amid risk-on mood.
- RBA stands pat on OCR but continues with its tapering plans.
- The aussie looks set to test 50-DMA support if 0.7400 caves in.
AUD/USD is threatening the 0.7400 level in the European session, extending its retreat from two-month highs of 0.7479 reached last Friday.
The corrective pullback remains at full steam, courtesy of the upbeat market mood, which further fuelled the rally in the Treasury yields, in turn, aiding the US dollar’s rebound.
Additionally, firmer Treasury yields dull the aussie’s attractiveness as a higher-yielding asset.
The dynamics in the yields and the greenback dominate alongside the market sentiment, outweighing the hawkish Reserve Bank of Australia’s (RBA) monetary policy decision.
Disappointing the doves, the RBA said that it will continue with its taper plans while brushing aside the Delta covid strain impact as temporary. The Australian central bank, however, left the Official Cash Rate (OCR) unchanged at a record low of 0.10% this month.
Looking ahead, investors fade the US NFP effect on the American dollar amid a data-scarce calendar. Therefore, the return of the US traders will be eyed for fresh trading cues on the major. Wall Street is set to reopen on Tuesday after a three-day weekend.
AUD/USD technical outlook
AUD/USD is looking to extend its correction towards the 50-Daily Moving Average (DMA) at 0.7370 if the 0.7400 support area yields in. The 14-day Relative Strength Index (RSI) has turned south but holds above the midline, suggesting that the recent uptrend remains intact. Should the 50-DMA hold the price could rebound towards the 0.7450 level, above which the two-month highs at 0.7479 could get retested.
AUD/USD daily chart
AUD/USD additional levels to consider