Bearish Cycle Extends

After losing ground on Friday AUD/USD has come under modest pressure in early Asia-Pac trade on Monday, the pair fell from intraday highs of around 0.7230 to close some 13 pips lower at 0.7279, the pair last down 14 pips at 0.7265.

• From a technical perspective AUD/USD traded lower again Friday, extending the pullback from 0.7478, Sep 3 high. The pair has breached its 20-day EMA and a deeper pullback would open 0.7248, a Fibonacci retracement. For bulls, 0.7478, Sep 3 high, marks the trigger for a resumption of the upleg that started Aug 20. A break would open the 0.7499/7503 resistance zone and establish a bullish sequence of higher highs and higher lows. For now though, a bearish theme dominates.
• Locally, Melbourne vaccine/lockdown-related protests stole the headlines over the weekend, while the city noted that it plans to exit its latest lockdown once 70% of Victoria state is fully vaccinated. The state Premier noted that limits on "reasons to leave home and the curfew will no longer be in place" once that target is met. Expectations are for that milestone to be hit in late October.
• Elsewhere, fallout from last week's U.S.-UK-Australia trilateral pact remain apparent, with France at the fore, as relations sour and slight signs of worry surrounding broader trade pacts including Australia become evident.
• There are no domestic releases on the docket today; several markets in the time zone, including China, are closed for holiday's which is expected to keep liquidity thin. Looking ahead RBA minutes and PMI data will be released this week, while dividend season is also approaching. CBA says: "Australian 'dividend season' could cause some intra‑day vol in AUD over the coming weeks. But we doubt any moves will be significant. Dividend payments are small relative to total daily AUD/USD turnover. There is more opportunity for AUD to move against the major cross rates such as AUD/GBP."