AUD/USD clings to modest recovery gains, just above mid-0.7000s
• The USD struggles to build on Friday’s goodish up-move and helps regain traction.
• The US political uncertainty/economic uncertainty seemed to weigh on the USD.
• Thin liquidity ahead of the year-end holiday season might limit meaningful movement.
The AUD/USD pair caught some fresh bids at the start of a new trading week and recovered a part of Friday's sharp slump, back closer to yearly lows.
The pair extended this month's sharp retracement slide from the 0.7400 neighborhood and remained heavily offered on Friday amid resurgent US Dollar demand, despite a downward revision of the US GDP growth figures for the third quarter of 2018.
However, the partial US government shutdown, coupled with growing concerns over the US economic prospects kept a lid on any strong follow-through USD up-move and turned out to be one of the key factors that helped the pair to gain some positive traction on Monday.
Meanwhile, trading volumes remained thin ahead of the year-end holiday season and might now hold investors from placing any aggressive bets, which might eventually lead to a subdued/range-bound trading action and cap any subsequent up-move.
Technical levels to watch
The ongoing recovery move, if extended, might now confront some strong resistance near the 0.7100 handle, which if cleared might trigger a short-covering bounce towards the 0.7135-40 supply zone. On the flip side, the 0.7040 region now becomes immediate support to defend, below which the pair is likely to accelerate the fall towards yearly lows en-route the key 0.70 psychological mark.