AUD/USD wavers around 0.7700 after 2020’s strong run-up

• AUD/USD consolidates recent gains amid a lack of major catalyst during early Asia.
• Nancy Pelosi’s re-election as House Speaker and hopes of Democratic victory in Georgia’s runoff propel US stimulus hopes.
• Virus conditions probe the bulls but vaccines tame the bears.
• Chain’s Caixin Manufacturing PMI, risk catalyst will be in the spotlight.

AUD/USD drops to the intraday low of 0.7694, currently 0.7696, during the early Monday morning in Asia. The aussie pair seems to consolidate the heavy gains of 2020, after being the biggest gainer among G10 currencies, amid a lack of major catalysts ahead of China’s Caixin Manufacturing PMI and second readings of activity data from the western world.

Even so, the recently flashed Commonwealth Bank Manufacturing PMI for December eased below 56.00 initial forecast to 55.7 and can be probed for an immediate downside.

Market optimism favor bulls…

Despite the recent pullback in AUD/USD prices, buyers remain hopeful amid the coronavirus (COVID-19) vaccinations, increasing odds of the US covid stimulus and rallying equities.

Latest updates from Capitol Hill suggest Nancy Pelosi’s re-election as the House Speaker. Although the news failed to provide any immediate market reaction, it does favor the chances of $2,000 paychecks as stimulus-friendly Democrats are bracing to rule the US after their recent victory in the 2020 elections. It should be noted that Georgia’s electoral runoff is pending for a decision on the Senate’s control that assents all decisions before reaching to President.

Elsewhere, the virus numbers are jumping in Europe and have recently resurged in the Vitoria as well. Although vaccinations are rising by leaps and bounds in developed world countries, the rates of increase in cases and deaths are much higher.

Brexit optimism also stands in the line of positive catalysts and favor the AUD/USD bulls. However, doubts over the future relations between the UK and the European Union (EU) amid uncertainty over key terms, tease bears.

Amid these plays, Wall Street benchmarks ended 2020 on an upbeat tone with Dow Jones and S&P 500 closing at record top.

Moving on, China’s December month Caixin Manufacturing PMI is likely to remain unchanged at 54.9 while risk headlines may take some time to populate the feed as most traders are still enjoying the year-end festivities. Overall, AUD/USD remains strong but a short-term pullback can’t be ruled out.

Also read: AUD/USD Price Forecast 2021: Winning the covid crisis insufficient for the aussie to withstand Chinese boomerang

Technical analysis

Overbought RSI conditions and expected consolidation from multi-month high suggests a pullback in AUD/USD prices towards the mid-December 2020 top near 0.7640. However, a two-week-old ascending trend line near 0.7635 could restrict short-term downside. Alternatively, a sustained run-up beyond the year 2020 peak surrounding 0.7745 becomes necessary to recall the bulls targeting April 2018 high near 0.7815.