AUD/USD fails to extend tepid recovery move, erases majority of daily gains

Having posted a session high at 0.7690 level, the AUD/USD pair reversed majority of the daily gains and has now moved back to neutral territory around 0.7670-75 band. 

Earlier during Asian session on Monday, the pair rebounded from lows and recovered back closer to 0.7700 handle amid consolidative price-action surrounding the greenback. In addition, upbeat copper prices lend additional support to commodity-linked currencies - like the Aussie, and collaborated to the pair's up-move. 

The momentum, however, lacked conviction as investors seemed reluctant to take initiate big bets amid thin market liquidity conditions in wake of President Day bank holiday in the US. Moreover, traders also seemed to readjust their positions ahead of RBA meeting minutes, scheduled for release during early Asian session on Tuesday.

Technical outlook

Omkar Godbole, Analyst cum Editor at FXStreet notes, "last week’s Doji candle and another failure to close above 0.77 handle points to indecision. Also note the Doji is preceded by a Dragon Fly Doji."

"On the daily chart, we have a bearish price RSI divergence. A break below 0.7610 would add credence to the exhaustion seen on the weekly chart and divergence on the daily chart. The spot could test 0.75 levels then. Such a move could also yield a bearish crossover the daily DMI. However, bears should not get too ambitious given the fact that the ADX line is losing height and is pointing lower, which suggests weak momentum."