AUD/USD rallies to mid-0.6700s, highest since early Feb.

• AUD/USD gained some strong traction on Monday and broke through 200-DMA barrier.
• The upbeat market mood and sustained USD selling remained supportive of the move.
• Technical buying above 0.6700 further collaborated to the pair’s strong bullish trajectory.

The AUD/USD pair caught some aggressive bids on Monday and rallied to near four-month tops, around mid-0.6700s.

A combination of supporting factors assisted the AUD/USD pair to build on its recent bullish momentum witnessed over the past two weeks or so and gain some strong positive traction on the first day of a new trading week. The momentum confirmed a fresh breakout through the very important 200-day SMA and was being supported by the upbeat market mood, the continuous offered tone surrounding the US dollar.

Investors breathed a sigh of relief after the US President Donald Trump began the process of ending Hong Kong's special status but did not withdraw from the US-China phase-one trade deal. This comes amid the latest optimism over a potential COVID-19 vaccine, the re-opening of economies and hopes of a sharp V-shaped recovery for the global economy, which remained supportive of the upbeat market mood.

Moreover, upbeat Chinese Caixin Manufacturing PMI further underpinned the prevalent risk-on environment, which continued denting the greenback's relative safe-haven status and provided a goodish lift to the perceived riskier Australian dollar. Adding to this, the buck was further pressured by widespread riots in the US, following George Floyd's death at the hands of Minneapolis police.

Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond 200-DMA and the 0.6700 round-figure mark further collaborated to the pair's strong upsurge on Monday. The pair was last seen trading near the highest level since early February.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of ISM Manufacturing PMI. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch