AUD/USD clings to intraday gains above 0.7700 mark, lacks follow-through

• AUD/USD regained positive traction on Tuesday amid renewed USD selling.
• The risk-on mood was seen as a key factor weighing on the safe-haven USD.
• Rallying US bond yields extended some support to the USD and capped gains.

The AUD/USD pair held on to its modest daily gains, albeit seemed struggling to build on the momentum. The pair was last seen trading around the 0.7710-15 region, up 0.45% for the day.

The pair regained positive traction on Tuesday, snapping two consecutive days of the losing streak and recovered the overnight losses to near two-week lows. The prevalent upbeat market mood prompted some fresh selling around the safe-haven US dollar and was seen as one of the key factors that benefitted the perceived riskier Australian dollar.

Against the backdrop of the optimism over the COVID-19 vaccine rollouts, the already stronger global risk sentiment got an additional boost from the increasing likelihood of more US fiscal stimulus. The market bets increased further after reports indicated that US Treasury Secretary nominee Janet Yellen will urge lawmakers to act big to a protracted downturn.

Meanwhile, expectations of a larger government borrowing, along with the risk-on flow triggered a fresh leg up in the US Treasury bond yields. This, in turn, extended some support to the USD and kept a lid on any strong gains for the AUD/USD pair. Investors might also prefer to wait on the sidelines ahead of President-elect Joe Biden's inaugural ceremony on Wednesday.

This makes it prudent to wait for some strong follow-through buying before positioning for any further gains amid absent relevant market moving economic releases. That said, Yellen's comments might influence the USD price dynamics. This, along with the broader market risk, might further contribute to produce some meaningful trading opportunities around the AUD/USD pair.

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