AUD/USD: Bulls ease control but stay in power around 0.7750 amid mixed sentiment

• AUD/USD seeks fresh clues to extend two-day uptrend.
• Doubts over tapering, cautious sentiment before the key Thursday and trade/political tussles concerning China weigh on the mood.
• Mixed messages over covid, vaccines trouble traders amid a light calendar.

AUD/USD holds onto the previous two days’ gains inside a range surrounding 0.7750 during the early Tuesday morning in Asia. Friday’s downbeat US jobs report and chatters over the Fed’s next move helped the Aussie pair during the recent days. Though, a lack of major catalysts and indecision ahead of Thursday’s key events trouble the bulls of late.

Fears battle optimism with eyes on central banks, inflation…

Although the US jobs report eased concerns over the tapering, mixed comments from US Treasury Secretary Janet Yellen relating to inflation, spending and interest rates probed optimism the previous day. On the same line were developments relating to US President Joe Biden’s infrastructure spending plan and the Group of Seven (G7) meeting results. While updates from the GOP suggest no counteroffer, the G7 agreed over the minimum 15% tax proposal.

Elsewhere, the US Secretary of State vows to hold China accountable for covid origin, as per the Axios, while the news of the US-Taiwan trade talks could also tease Beijing and escalate the tussles among the world’s top two economies. Additionally, UK Trade Secretary Liz Truss backed Australia in its trade complaint against China.

On the risk-positive side, also positive for the AUD/USD prices due to its risk-barometer status, were the steady vaccinations and the western policymakers’ confidence in reopening the economic activities curbed due to the virus. Not only the US and the UK but the latest updates from Ontario also suggest that the Canadian province is up for unlock three days before the scheduled expiry. At home, the covid cases broke the downward trajectory with the 11 cases registered during the weekend.

Amid these plays, Wall Street closed mixed and the US 10-year Treasury yields struggled to hold 1.56% level whereas the US dollar index (DXY) remains pressured by the press time.

Given the mixed sentiment and a lack of clarity, AUD/USD traders may look towards risk catalysts, amid a light calendar in Asia, for fresh impulse.

Technical analysis

A daily close beyond 21-day SMA and monthly resistance line, now support, keeps AUD/USD buyers hopeful. However, the further upside has the 0.7800 threshold and 0.7820 as challenges. Meanwhile, the Aussie pair’s drop below 0.7750 will have a 50-day SMA level near 0.7725 as a strong support to break before testing the 0.7680-75 support zone.