AUD/USD holds onto recovery moves around 0.7200 on softer USD

AUD/USD keeps the week-start bounce off yearly low near 0.7210 during the early Tuesday morning in Asia. The Aussie pair dropped the most in 11 months the previous week before marking the heaviest daily rise since April the previous day. While the coronavirus woes could be considered as a major drawback, the latest recovery in equities and gold, backed by a downbeat US dollar, favor the pair buyers.

Australia’s daily coronavirus cases remain near the record top but the latest news on the vaccine and downbeat PMI’s favor the AUD/USD buyers. That said, the Oz nation registered another 900+ infections on Monday but New South Wales (NSW), the most infected state, registers the fastest vaccination pace in the world and is keeping the optimists hopeful.

On the same line, the US Food and Drug Administration (FDA) approved Moderna–BioNTech covid vaccine for use over 16 years and above, which in turn offered another weapon to battle the pandemic.

Elsewhere, the preliminary readings of August month’s activity numbers from the US, Europe, the UK and Australia all suggest a bit of softening despite rejecting the contraction. The same helps the US Federal Reserve (Fed) and its friends on the line to reject challenges for their easy-money policies.

These catalysts helped Wall Street to post a happy start to the week while gold also regains $1,800 level due to the risk-on mood. It’s worth noting that the US Dollar Index (DXY) and the US 10-year Treasury yields were softer by the end of Monday’s trading session.

Looking forward, a lack of major data/events may keep AUD/USD traders at the mercy of qualitative catalysts for immediate direction. Among them, news on the coronavirus, vaccine and central banks will be the key to follow.

Technical analysis

AUD/USD bounces off nine-month low amid oversold RSI conditions, suggesting further recovery towards October 2020 peak surrounding 0.7140-45. However, bulls are less likely to be convinced until witnessing a daily closing beyond July’s low of 0.7288. Alternatively, June 2020 high near 0.7065 can entertain sellers during the pair’s fresh downside.