AUD / USD cuts modest intraday gains, sideways near 0.7250

• AUD / USD consolidated its recent gains and remained confined in a range below the monthly high.
• A softer tone in equity markets acted as a headwind for the Aussie perceived as riskier.
• The slide remains muffled amid declining Omicron fears and tight end-of-year liquidity.

The pair AUD/USD it trimmed its modest intraday gains and was last seen hovering near the lower end of the daily trading range, around 0.7250.

The pair struggled to capitalize on its recent upward trajectory and hovered in a tight trading range, below the 100-day SMA for the second day in a row on Friday. A cautious mood in the market, as shown by a softer tone in equity markets, acted as a headwind for the perceived riskier Australian.

That said, recent optimism about signs that the Omicron variant could be less severe than feared and unlikely to derail the economic recovery continued to underpin risk sentiment. This, coupled with subdued US dollar price action, should help limit the AUD / USD downside amid tight end-of-year liquidity.

In the absence of major economic releases to move the market, broader market risk sentiment would boost USD demand and allow traders to seize some short-term opportunities on New Years Eve. However, the AUD / USD pair is still on track to end modest gains for the second week in a row.

Market focus now shifts to important US macroeconomic data, including the closely watched US Monthly Jobs Report (NFP), scheduled for the start of a new month. Aside from this, the developments surrounding the coronavirus would help traders determine the next leg of a directional move for the AUD / USD pair.

Technical levels