AUD / USD retraces from multi-year highs and moves with modest losses around the 0.7420 region

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  • Weaker-than-expected Australian retail sales trigger profit-taking around AUD / USD on Friday.
  • Market optimism weighs on the safe-haven USD and could help limit the slide.
  • Investors await the release of the US monthly NFP employment report for further momentum.

The pair AUD/USD moves lower during the European session on Friday, staying near the lower end of its daily range around the region of 0.7420.

The pair have witnessed a profit taking on the last trading day of the week following the release of weaker-than-expected Australian retail sales data, which rose 1.4% MoM in October. The reading has come in below estimates and has also marked a slight slowdown from the previous month’s increase of 1.6%.

The AUD / USD pair, for now, appears to have broken three consecutive days of gains and has returned some of the previous day’s strong move to the highest level since July 2018. However, the decline is likely to remain limited amid the prevalence of bearish sentiment around the US dollar.

The optimism about the launch of a coronavirus vaccine and expectations for additional fiscal stimulus in the United States hopes for a rapid global economic recovery have revived. This, in turn, has weighed on the safe haven USD and could extend some support to the higher perceived risk AUD.

USD bulls could also refrain from opening aggressive positions amid expectations that the Fed will expand its bond buying program in December. This makes it prudent to wait for a strong continuation sell before confirming that the AUD / USD pair has already reached its short-term high.

Market participants are now awaiting the release of the monthly US jobs report, popularly known as the NFP. The data, along with broader market risk sentiment, could influence USD price dynamics and generate some short-term trading opportunities around the AUD / USD pair.

AUD / USD technical levels

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