AUD/USD pares early losses, registers modest gains near 0.6550

• The upbeat market mood helps AUD/USD recover its early losses.
• US Dollar Index stays under modest bearish pressure below 100.
• US financial markets are closed in observance of Memorial Day on Monday.

The AUD/USD pair started the week with a small bearish gap but didn't have a hard time erasing its losses with the risk-on environment helping the AUD find demand. As of writing, the pair was up 0.12% on the day at 0.6544.

AUD capitalizes on risk-on flows

The easing of coronavirus-related restrictions in major economies seems to be helping global equity indexes to gain traction on Monday. At the moment, Germany's DAX 30 Index is up 2.15% on a daily basis and the Euro Stoxx 50 Index is rising 1.7%.

Commenting on the AUD's recent performance against its major rivals, “The Aussie has benefitted from optimism, as the antipodean nations have been the first to re-open economies, after shutting down due to the COVID-19 crisis,” said analysts at CIBC Capital Markets.

Nevertheless, the financial markets in the US will be closed on Monday due to the Memorial Day holiday and the pair is unlikely to make a decisive move in either direction. Meanwhile, the US Dollar Index is posting small daily losses near 99.70, helping the pair to stay afloat in the positive territory.

There won't be any significant macroeconomic data releases during the Asian session on Tuesday. Later in the day, Conference Board Consumer Confidence Index and New Home Sales data from the US will be watched closely by the market participants. 

Technical levels to watch for

AUD/USD