AUD/USD refreshes session tops, around 0.7765 region amid softer USD
- A modest USD pullback assisted AUD/USD to attract some dip-buying near the 0.7725 region.
- Retreating US bond yields were seen as a key factor that kept the USD bulls on the defensive.
- Upbeat US economic outlook should help limit the USD downside and cap gains for the major.
The AUD/USD pair managed to rebound around 40 pips from intraday lows and refreshed daily tops, around the 0.7765 region during the early European session.
The pair extended the previous day's retracement slide from mid-0.7800s, or monthly tops and witnessed some selling through the early part of the trading action on Friday. Disappointing Australian Retail Sales data and a softer risk tone were seen as key factors that exerted some pressure on the AUD/USD pair.
However, a modest US dollar pullback helped limit any further losses, rather assisted the AUD/USD pair to attract some dip-buying near the 0.7725 region. The yield on the benchmark 10-year US government bond retreated from over one-year tops set on Thursday, which, in turn, kept the USD bulls on the defensive.
Apart from this, a goodish rebound in the US equity futures acted as a headwind for the safe-haven greenback and provided an additional lift to the perceived riskier aussie. That said, the optimistic outlook for the US economy should continue to underpin the USD and cap any meaningful upside for the AUD/USD pair.
The Fed added to the narrative of a relatively faster US economic recovery and predicted a V-shaped recovery this year. Moreover, policymakers did not show any discomfort from the recent surge in long-term borrowing cost. This should act as a tailwind for the US bond yields, which should also lend some support to the USD.
There isn't any major market-moving economic data due for release from the US on Friday. This makes it prudent to wait for some strong follow-through buying before traders start positioning for any further gains for the AUD/USD pair. In the meantime, the USD price dynamics will continue to play a key role in influencing the pair.
Technical levels to watch