AUD/USD pauses 3-day rebound near 0.7875 as risk-on cools-off

• Underpinned by Aus NAB, weaker DXY.
• Sell the rallies to 0.7900?
• Risk trends to dominate ahead.

The AUD/USD pair stalled its three-day recovery mode from six-week lows and entered a phase of upside consolidation heading into Europe, as the bulls face exhaustion after the recent upsurge.

AUD/USD faces resistance near 50-DMA of 0.7879

The spot is seen consolidating the latest upmove to four-day tops of 0.7874, as the bulls remain nervous amid waning risk appetite, reflected by the retreat in the Japanese equities and Treasury yields.

Despite the pause, the sentiment around the Aussie continues to remain underpinned by the ongoing USD selling across its main competitors while better-than-expected Australian NAB business surveys also helped keep the buoyant tone intact. Australia NAB business confidence jumped to 9-month high in January

Meanwhile, markets digest the speech delivered by the RBA Assistant Governor Ellis earlier today, in which she warned of slow wage growth despite robust jobs market. Looking ahead, the pair will take cues from the broader market sentiment ahead of the Fedspeak, as the US macro calendar remains data-dry.

AUD/USD levels to watch

Jim Langlands at FX Charts, noted, “The technical picture for the Aud is mixed again on Tuesday and a cautious stance is required. While the dailies still point lower, the 4-hour charts hint that the current bounce could continue and above the current levels could see an extension towards 0.7870/90 and possibly back to 0.7900/10. The dailies still look heavy though and the downside will again see bids at 0.7800/10, at 0.7780 and at 0.7755/60 although I don’t see the Aud back below 0.7800 today.”