Title: AUDUSD climbs further beyond mid-0.6400s amid weaker USD, lacks follow-through

November 07,2022 06:06 AM ET

By:AnalysisWatch

The AUDUSD pair attracts some buying in the vicinity of the 0.6400 mark on Monday and fills the weekly bearish gap that opened during the first half of the European session. The pair made a new daily high in the last hour, albeit with a lack of follow-through, and remains below the psychological 0.6500 level.

The US dollar struggles to hold on to its modest intraday gains and declines for the second day in a row, which in turn is seen as offering some support to the AUDUSD pair. Mixed results from the monthly US jobs report released on Friday fueled speculation that the Federal Reserve may slow the pace of its tightening policy. This, along with a positive turn in global risk sentiment, weighs on the safe-haven dollar and benefits the risk-sensitive Aussie.

That said, growing market concerns over headwinds stemming from China's commitment to maintain its economically disruptive COVID policy could dampen the upbeat move. Apart from this, higher US Treasury yields should act as a tailwind for the greenback and help limit the AUDUSD pair's upside, at least for the time being. In addition, traders would prefer to wait for a further catalyst in Thursday's US consumer inflation figures.

Even from a technical standpoint, spot prices have yet to confirm a convincing break through a downtrend line extending from August's monthly high. In the absence of any major economic releases for the market on Monday, the fundamental backdrop warrants some caution for aggressive bullish traders. Therefore, it will be prudent to wait for strong follow-through buying before positioning for any significant upside moves in the AUDUSD pair.