AUD/USD seesaws near 0.7800 after the heaviest run-up in two weeks

• AUD/USD consolidates recent gains in a small range after a failed attempt to refresh monthly top.
• Upbeat sentiment, base metals’ rally helped Aussie despite a light economic calendar due to ANZAC Day off.
• Vaccine hopes favor bulls positive ahead of Aussie CPI, Fed.

Having posted the biggest daily gains since mid-April, not to forget testing the monthly peak, AUD/USD bulls catch a breather in a 10-pip trading range around 0.7800 during the early Asian session on Tuesday. Although Aussie markets were off on Monday and the economic calendar was light as well, strong copper prices and hopes of a speedy exit from the coronavirus (COVID-19) pandemic, due to faster vaccinations, favored the bulls the previous day.

Charging up for Aussie CPI, Fed…

The return of Australian traders after the ANZAC Day off seems to witness a cautious mood ahead of the week’s key events, namely Wednesday’s Q1 Consumer Price Index for Australia and the Fed’s monetary policy meeting. Although the Aussie CPI will be weighed over the RBA’s cautious optimism, the Federal Reserve decision may ignore the Bank of Canada’s (BOC) out-of-the-box move while backing continuous monetary stimulus for further economic recovery.

It’s worth mentioning the currency major benefited from the strong commodity prices, particularly copper’s rally to a fresh 10-year high. Weaker US dollar and hopes of faster vaccinations also backed the AUD/USD bulls even as India’s covid conditions and the global tussle with China test further upside.

A point to note is that the latest challenges to US President Joe Biden’s infrastructure spending, on the back of fresh census numbers and the industry dislike for tax hike proposal, offer an extra test for the markets.

Against this backdrop, Wall Street closed mixed while the US 10-year Treasury yield remains unchanged around 1.57%. Further, the US dollar index (DXY) stays pressured near the lowest levels since early March.

Looking forward, the Australian economic calendar is empty and hence risk catalysts, as well as commodity price moves, will be the key to follow for fresh impetus.

Technical analysis

While a sustained trading beyond 50-day EMA and a clear upside break of a two-month-old resistance line, now support, back AUD/USD bulls, a horizontal area comprising the monthly top and January’s peak surrounding 0.7820 guards quote’s immediate upside.