AUD/USD: Will it regain 0.7700/10 barrier ahead of US data?

• 200-DMA at 0.7710 back on sight
• USTs, USD on the back foot
• Focus shifts to US core PCE index, China PMIs

The AUD/USD pair is seen trying hard to take on the recovery towards 0.77 handle, but the bears seem to guard 0.7680 levels, despite a broadly subdued US dollar and weaker Treasury yields.

AUD/USD: Will the recovery sustain?

The Aussie is looking to extend its recovery from three-month lows of 0.7625 into a second day today, on expectations that Trump’s tilt towards Powell as the next Fed Chair will continue to weigh down on the US Treasury yields and in turn on the US dollar against its main competitors.

According to the latest WSJ report, the US President Trump is likely to announce Jerome Powell as a Yellen's successor at the Fed. Trump is likely to announce his decision this week.

However, looming uncertainty around the Australian political climate, in the wake of the Australia PM Turnbull losing majority after court citizenship ruling, could keep further upside capped.

Meanwhile, the recovery could also remain in check amid monetary policy divergence between the Fed and RBA and increased cautiousness ahead of a data-heavy week, with the Chinese manufacturing PMIs, FOMC decision and Australian macro releases likely to emerge the main risk events.

AUD/USD Levels to consider                                                                              

Jim Langlands at FX Charts noted: “With both the 1 & 4 hour charts looking positive, a run back to 0.7690/0.7700 would not surprise. Above 0.7700 could see a run back to 0.7740, although I don’t really see it but would sell into it if we were to do so. In the medium term trading from the short side remains favoured, looking for another run towards Friday’s lows and eventually towards 0.7570 although that won happen today and I suspect we may drift a little higher.”