AUD/USD clings to modest recovery gains, comfortably above 0.6500 mark
- Improving risk-sentiment helped AUD/USD to fill the weekly bearish gap.
- Increasing Fed rate cut bets weighed on the USD and remained supportive.
- Bulls now seemed reluctant ahead of the RBA policy decision on Tuesday.
The AUSD/USD pair held on its intraday recovery gains, albeit lacked any strong follow-through and struggled to build on the momentum beyond mid-0.6500s.
The pair managed to stage a goodish bounce from the vicinity of multi-year lows (set on Friday) and quickly closed the weekly bearish gap opening amid a slight improvement in the global risk sentiment.
The focus now shifts to RBA on Tuesday
As investors assessed the impact of the coronavirus outbreak on the global economy, disappointing Chinese official PMI prints weighed on the China-proxy Australian dollar on the first day of a new week.
However, speculations of a coordinated interest rate cut by the top central banks helped boost investors' sentiment and extended some support to perceived riskier currencies, including the aussie.
On the other hand, the US dollar remained depressed in the wake of the second coronavirus-led death in the US and firming expectations that the Fed will cut rates at its upcoming meeting on March 18.
Market expectations were further fueled by the Fed Chair Jerome Powell's comments on Friday, saying that the central bank will "act as appropriate" to offset the economic risks posed by the coronavirus.
Despite a goodish bounce of around 80 pips from lows, the uptick lacked any strong bullish conviction as traders refrained from placing aggressive bullish bets ahead of the RBA policy decision on Tuesday.
In the meantime, the release of the US ISM Manufacturing PMI might influence the USD price dynamics and produce some trading opportunities later during the early North-American session on Monday.
Technical levels to watch