AUD/USD is trading up 0.38% at 0.7183

The U.S. dollar slipped lower in early European trade Monday, heading for its first monthly drop in five months as a calmer risk environment and raised expectations of a pause in the Federal Reserve’s tightening cycle weighed.

At 2:55 AM ET (0655 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 101.510, steadily retreating from the two-decade high of 105.010 seen earlier in May.

Additionally, EUR/USD rose 0.2% to 1.0753, GBP/USD rose 0.2% to 1.2637, holding on to last week’s hefty gains, while the risk-sensitive AUD/USD climbed 0.3% to 0.7184 and NZD/USD jumped 0.2% to 0.6549, both pairs near three-week highs.

Volatility is likely to be light Monday, with U.S. stock and bond markets closed for the Memorial Day holiday, but helping the risk appetite has been positive news out of China regarding the easing of COVID-19 measures.

Shanghai said on Sunday curbs on businesses will be removed from June 1, while Beijing reopened parts of its public transport as well as some malls.

USD/CNY fell 0.7% to 6.6507 as a result, with the yuan buoyed by the progress out of virus lockdowns.

China is set to release forward-looking manufacturing and non-manufacturing PMIs on Tuesday and Wednesday, and these will be studied for clues as to the extent of the economic slowdown the COVID restrictions have wrought on the world’s second largest economy.

On technical fronts AUD/USD RSI stood at 92.25 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : AUD/USD – BUY: 0.7180, TARGET: 0.7223, STOP LOSS : 0.7144