- AUD / USD makes a nice rally on Friday amid some profit-taking from the USD.
- Risk appetite provides an additional boost to the perceived riskier Australian dollar.
- A combination of factors could limit any further gains in the pair.
The pair AUD/USD has built on its constant positive intraday movement and clings to daily gains, around the 0.7625 region, at the start of the European session on Friday.
Following the price movements in both directions the day before, the pair managed to gain some positive traction on Friday and has seen a rebound from near annual lows. Positive risk sentiment has sparked some profit-taking around the safe haven US dollar and fueled some cash flows towards the higher perceived risk Australian dollar.
Other than this, the rally has lacked an obvious fundamental catalyst and risks fading fairly quickly. The optimistic US economic outlook could continue to prop up the USD. Apart of this, tensions between China and Australia could do even more to limit any significant rise for the AUD / USD pair.
Claims for Unemployment Benefits in the United States Released on Thursday, better than expected falling to a one-year low at 684,000, reinforced the narrative of a relatively faster US economic recovery. To increase optimism, United States President Joe Biden, in his first formal press conference Thursday, made an ambitious promise to administer 200 million vaccine injections in his first 100 days in office.
Meanwhile, Australia’s ambassador to China, Graham Fletcher, has said that China has been exposed as an unreliable and even vindictive trading partner. This has added to concerns about increased escalation of diplomatic tensions between China and Western countries, which should limit the gains of the Australian dollar.
Market participants are now awaiting the US economic calendar, which features the release of February personal income / spending figures, the underlying PCE price index, and the University of Michigan consumer sentiment index. The data could provide further clues to the US economic strength, which in turn could influence the USD and provide some boost to the AUD / USD pair.
AUD / USD technical levels
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