AUD/USD looks to extend the recovery momentum beyond 0.6700 mark

• AUD/USD stages a modest recovery from four-month lows.
• A pickup in the USD demand seemed to cap any strong gains.
• Traders now eye US ISM Manufacturing PMI for a fresh impetus.

The AUD/USD pair built on the intraday bounce from four-month lows and is now looking to extend the momentum further beyond the 0.6700 round-figure mark.

The pair reversed an early dip to the lowest level since early October and witnessed some short-covering move following the release of better-than-expected Australian building approvals data for December.

The China-proxy aussie was further supported by the calming liquidity injections offered up by the PBoC and seemed rather unaffected by a slight disappointing from Caixin Manufacturing PMI for January.

Meanwhile, a modest pickup in the US Treasury bond yields helped the US dollar to regain some positive traction, which might eventually turn out to be one of the key factors capping further gains.

However, a surge in bets for further monetary policy easing by the Fed – amid continuing fears about the outbreak of China’s deadly coronavirus – might keep a lid on any strong USD positive move.

Hence, any intraday weakness might continue to attract some dip-buying and limit deeper losses ahead of the release of US ISM Manufacturing PMI, due later during the early North-American session.

Technical levels to watch