The risk-on moves across the board continued overnight and the majors, in particular, remain strong.

The AUD/USD has seen more upside to start the trading week and is now on the verge of testing 0.7800. This level is about as high as we have seen in 12 months after the big COVID sell-off and subsequent rebound.

Once again, it remains the weakness in the USD that is really at the heart of these moves higher. That said, we are also seeing continued upside in the likes of equity markets across the globe. Interestingly, we are also seeing precious metals remain soft even though the USD is falling.

I am still somewhat cautious at the moment and that goes for all risk assets. I truly feel that this is the calm before the storm and we could see a very sharp reversal.

The first test for the AUD/USD will, of course, be the 0.7800 level, to see if it can in fact hold up OK.

0.7770 and 0.7720 are the next two swing lows that if taken out, would indicate a reversal of trend. 0.7700 will be a level of interest, but I suspect we could see price pullback to 0.7600 in a hurry.

To the upside, we simply need to see if 0.7800 can hold up as we haven’t even tested it just yet. Continue to watch the USD and also how stocks open up for the week. We have seen the ES futures positive for two days now which is still a very bullish indicator.

We also have the Aussie jobs data out later this week, which will be an indicator of sentiment and could shake things up a bit.