AUD/USD Analysis: Bulls retain control near multi-month top ahead of RBA on Tuesday

• AUD/USD climbs to a fresh multi-month top on Monday amid sustained USD selling bias.
• Despite the upbeat NFP report, bets for smaller Fed rate hikes continue to weigh on the buck.
• Hopes for easing COVID-19 curbs in China further benefit the risk-sensitive Aussie.
• Traders look to the US ISM Services PMI for some impetus ahead of the RBA decision on Tuesday.

The AUD/USD pair kicks off the new week positively and jumps to its highest level since August 13 during the Asian session. The US Dollar sinks to over a five-month low and is a key factor acting as a tailwind for the major. Despite Friday's upbeat US monthly jobs data, expectations that the Fed will slow the pace of its policy tightening continue to exert some downward pressure on the greenback.

The closely-watched NFP showed that the US economy added 263K new jobs in November, beating consensus estimates for a reading of 200K. Adding to this, the previous month's print was also revised higher to show an addition of 284K vacancies as compared to the 261K reported originally. Furthermore, the jobless rate remained steady at 3.7%, while Average Hourly Earnings grew 0.6% in November and 5.1% YoY.

An upside surprise in job gains and wages points to a further rise in inflationary pressures, validating Fed Chair Jerome Powell's forecast that the peak rate will be higher than expected. That said, the recent comments by several FOMC Officials support prospects for relatively smaller interest rate hikes by the US central bank. Apart from this, hopes for easing COVID-19 curbs in China keep the USD bulls on the defensive.

The aforementioned factors help offset the disappointing release of a private-sector business survey from China, indicating that services activity shrank to six-month lows in November. The market focus now shifts to Tuesday's Reserve Bank of Australia (RBA) meeting. In the meantime, traders might take cues from the US ISM Services PMI, due for release later during the early North American session on Monday.

Technical Outlook

From a technical perspective, last week’s sustained strength above the 0.6765-0.6770 supply zone was seen as a fresh trigger for bullish traders. The emergence of fresh buying on Monday adds credence to the positive breakout and supports prospects for a further near-term appreciating move. Hence, a subsequent move towards the 0.6900 mark, en route to the September monthly top around the 0.6915 area, looks like a distinct possibility. Some follow-through buying should allow bulls to aim back to reclaim the 0.7000 psychological mark for the first time since August.

On the flip side, the 0.6800 round figure now seems to protect the immediate downside ahead of the 0.6770-0.6765 horizontal support. Any further pullback could be seen as a buying opportunity near the 0.6700 mark and remain limited. This is closely followed by the 100-day SMA support, currently around the 0.6685 region, which, if broken decisively, could prompt some technical selling and pave the way for a deeper corrective pullback.