AUD/USD extends Monday’s strong recovery, taps 0.7400 handle

The AUD/USD pair's recovery momentum from Monday's nearly five-month low level of 0.7310 gained further traction on Tuesday, lifting the pair back to 0.7400 handle.

On Monday, the pair snapped a three-day losing streak and staged a goodish recovery as the overall US Dollar Index halted its post-US presidential election up-surge to 13-year highs. Additional greenback retracement during early Asian session on Tuesday helped the pair to extend overnight recovery gains. Moreover, the prevalent risk-on mood, as depicted by positive sentiment surrounding equity markets, and upbeat commodity prices further offered some fundamental support to riskier/higher-yielding currencies - like Aussie. 

Next in focus would be the release of US existing home sales data, later during NA session, and would be looked upon for short-term trading opportunities. However, the broader trend would be dependent on Wednesday's release of US durable goods orders and FOMC meeting minutes ahead of next week's NFP data.

Technical levels to watch

Immediate upside resistance is pegged at 0.7418 (Friday's high) above which the pair seems more likely to extend the recovery trend further towards its next major resistance near 0.7445-50 region. On the downside, 0.7380 level now becomes immediate support, which if broken has the potential to drag the pair towards 0.7335 intermediate support en-route 0.7310 (yesterday's low) support.

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