AUDUSD is holding onto gains at its daily high despite a slight drop in the USD

AUDUSD gets significant upward traction on Monday, snapping a two-day losing run.

The AUDUSD pair regains upward momentum on the opening day of a new week. Recovering a significant portion of Friday’s losses to a one-and-a-half-week low. Spot prices maintained significant intraday gains just below the 0.6700 level. Throughout the first part of the European session. And appear to have halted last week’s retracement decline from the highest level since February 24.

A favorable risk tone drives some USD selling and gives the major a little boost.

The US Dollar (USD) fails to capitalize on its recent strong gains. And retreats from its highest level since early April reached on Monday. Prompting some short-covering in the AUDUSD pair. A generally bullish tone in the equity markets is seen hurting the safe-haven US dollar. While benefiting the risk-sensitive Australian dollar. Having said that, any Significant USD weakness appears difficult. With renewed betting that the Federal Reserve (Fed) would maintain its hawkish posture in the aftermath of an increase in US long-term inflation forecasts.

In fact, the preliminary May reading from the University of Michigan, issued on Friday, revealed that consumers expect prices to rise at a 3.2% annual pace over the next five years, the highest rate since 2011. This may push the Federal Reserve (Fed) to maintain interest rates higher for a longer period of time, which continues to operate as a tailwind for US Treasury bond yields and supports the potential of some USD dip-buying. This, combined with concerns about an impending recession, might dampen market confidence and add to market volatility. to limit the AUDUSD pair’s gains.

However, the RBA’s hawkish stance, implying that some more tightening of monetary policy may be necessary to guarantee that inflation returns to goal in a fair period, should cause bearish traders to exercise caution. Moving forward, the US economic calendar, which includes the release of the Empire State Manufacturing Index as well as a speech by Minneapolis Fed President Neel Kashkari, may have an impact on USD price dynamics. Aside from that, the wider market risk attitude may also contribute to the creation of short-term trading opportunities in the AUDUSD pair.

AUDUSD Technical Levels