AUD/USD eases from tops, holds steady near 100-day SMA

• AUD/USD edged higher for the third consecutive session on Monday.
• The risk-on mood, weaker USD remained supportive of the move up.
• The uptick lost steam near 0.6560 area, ahead of the recent swing high.

The AUD/USD pair edged higher on the first day of a new trading week and climbed to 1-1/2-week tops, albeit lacked any strong follow-through.

The aussie built on last week's goodish bounce from the 0.6380-75 support area and gained some follow-through traction for the third consecutive session on Monday. The uptick lifted the pair beyond the 100-day SMA barrier and was supported by a combination of factors.

Despite concerns about the second wave of coronavirus infections, investors remained optimistic over the re-opening of economies in some parts of the world and hopes for a quicker-than-anticipated global economic recovery from the coronavirus-induced lockdowns.

This coupled with easing tensions between China and the United States further boosted investors' confidence. This was evident from a positive mood around the equity markets, which, in turn, provided a modest lift to perceived riskier currencies, including the Australian dollar.

The risk-on mood dented demand for traditional safe-haven assets and exerted some additional pressure on the already weaker US dollar, which remained on the defensive amid speculations that the Fed might be forced to push interest rates below zero.

Bulls, however, lacked any strong conviction and failed to assist the pair to extend the momentum further beyond the recent swing highs, around the 0.6570 region. This makes it prudent to wait for some follow-through buying before positioning for any further appreciating move.

In the absence of any major market-moving economic releases on Monday, the broader market risk sentiment and the USD price dynamics might continue to play a key role in influencing the pair's momentum.

Technical levels to watch