• AUD/USD wavers around three-week low flashed on Friday.
  • RBA’s surprise bond purchase, upbeat US data portrayed heaviest decline since March 18, 2020.
  • China’s NBS Manufacturing PMI eased in February, Caixin PMI awaited.
  • Treasury yields, US stimulus headlines and month-start activity numbers will be the key.

AUD/USD gyrates near a three-week low, currently around 0.7710, as Asian traders prepare for the month-start moves during Monday. The aussie pair portrayed the heaviest daily slump since March 2020 on Friday as the RBA’s unscheduled bond purchases joined the US dollar’s notable strength on upbeat data and stimulus news.

In doing so, the AUD/USD prices pay a little to the recent data releases at home and abroad. Australia’s February month AiG Performance of Mfg Index rose from 55.3 to 58.8 whereas China’s NBS Manufacturing PMI for the said month, published Sunday, eased below 51.3 prior to 50.6, the lowest in nine months.

Bears keep the reins on RBA action, greenback rally…

Although the early Friday RBA bond purchases initially had a sober reaction, the movement joined the US dollar strength afterwards to drag the AUD/USD to a three-week low. As the Aussie central bank was the first to surprise markets, global traders fear major central banks to copy the moves amid reflation fears.

Also weighing on the quote is the US dollar strength. The greenback gauge, US dollar index (DXY), marked the strongest run-up since May 2020 after the better-than-expected data at home propelled fears of the further run-up in inflation. On the same line was the passage of US President Joe Biden’s $1.9 trillion covid relief stimulus by the House. The much-awaited relief bill is likely to pass through the Senate by March 14 and could offer extra strength to the greenback.

In addition to the data, central bank moves and stimulus update, the AUD/USD pair also reacted to the market’s fears and the slump in the US Treasury yields and risk-off mood.

Against this backdrop, the Wall Street benchmarks offered mixed closing by the end of February.

Looking forward, China’s Caixin Manufacturing PMI and Australia’s TD Securities Inflation for February will decorate the calendar in Asia. Though, major attention will be given to the stimulus news and treasury yields.

Technical analysis

Despite breaking a four-month-old support line, AUD/USD is yet to validate further downside by clearing 50-day EMA support near 0.7690. During the corrective pullback, the support-turned-resistance line near 0.7720 and 21-day EMA level of 0.7775 should be watched closely.