AUD/USD holds above 0.7100 ahead of European trading
And that is a good sign for buyers after last week's attempts to break above the 0.7100 failed. There is some minor resistance around 0.7120-25 now but a break above that could see a quick rise towards 0.7160 where the 100-day moving average lies.
If buyers can get above that, it would break the bearish momentum in the pair and price could potentially start tracking back towards 0.7200 over the next few sessions. Although yields are still the long-term play for the pair, the fact that buyers have shown resilience in defending the 0.7000 level means the risk-reward play just isn't there at the moment; not without any new factors to drive the aussie lower.
The yields spread between 10-year Treasuries and Australian bonds have tightened from 66 bps on Thursday to just 61 bps currently and that is also part of the reason that's helping AUD/USD move higher alongside a slightly weaker dollar and positive risk sentiment to start the week.
For the session ahead, we won't have much on the data docket to drive direction so look towards technical levels for clues on bias/direction. As mentioned above, the resistance region around 0.7120-25 will dictate any further upside breaks or cap price action while downside remains limited by the key hourly moving averages.
