AUD/USD - descending tops are history, flirts with 0.76 levels

• Bullish technical breakout on AUD/USD.
• US tax bill optimism caps gains.

"We believe that AUD/USD has found a near-term bottom above 75 cents", says Kathy Lien from BK Asset Management. Friday's move above the descending trend line (drawn from Sep. 20 high and Oct 20. high) does support Lien's view.

Also, the upbeat MI inflation gauge and the uptick in the Australian Q3 inventories is AUD positive. Still, the spot is trading well below Friday's high of 0.7638 as the USD found bids earlier today on fading political uncertainty and tax reform optimism.

Over the weekend, the ABC network corrected its report saying former national security adviser Michael Flynn would testify against President Trump. Also, Senate's approval of tax bill has Republicans and President Donald Trump a big step closer to their goal of slashing taxes.

The treasury yields have shot up, helping the USD recover Friday's losses. As of writing, the 10-year yield is at 2.4 percent; up 4 basis points (bps), while the pair is flirting with 0.70 levels.

Ahead in the day, the spot may find it difficult to revisit Friday's high of 0.7638 as European and US desks may bid for the USD on tax reform optimism.

AUD/USD Technical Levels

Valeria Bednarik, Editor and Analyst at FXStreet, writes, " In the daily chart, the pair settled around a still bearish 20 DMA, while technical indicators aim higher but within neutral territory. Shorter term, and according to the 4 hours chart, the pair presents a modest upward potential, as the price settled above its 20 SMA while indicators consolidate within positive territory. Still, the price needs to extend beyond the 0.7645 resistance to post a more positive stance."

Support levels: 0.7575 0.7530 0.7500

Resistance levels: 0.7645 0.7680 0.7710