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AUD/USD: Bulls seek strong push to extend Friday’s jump to 10-week top

  • AUD/USD begins the week with a gap-up but fails to refresh recent top.
  • Risk appetite strengthened as equities, gold cheered NFP’s shock but Treasury yields rose and US dollar dropped.
  • Downbeat jobs report backed Fed’s support to easy money policy.
  • Final reading of Aussie Retail Sales for March, NAB data for April will decorate calendar, risk catalyst are the key.

AUD/USD fails to extend the week-start upside gap beyond Friday, taking rounds to 0.7850 by the early Monday morning in Asia. The Aussie pair marked the heaviest jump in over three weeks the previous day but is recently struggling to please bears ahead of second-tier Aussie data and mixed factors describing the market sentiment.

The NFP-backed ride needs more fuel…

Friday turned out to be a complete shocker for the global markets as the US headlines Nonfarm Payrolls came in less than a third of market consensus, 266K versus roughly 1 million expected. The US Unemployment Rate for April also jumped to 6.1% versus a likely drop to 5.8%.

While disappointment from the US jobs report should have ideally weighed on the global sentiment, the data offered strong support to the Fed’s defense of easy money policies, which in turn propelled Wall Street and gold prices. However, the US dollar index (DXY) dropped to a fresh low since late February, not to forget reporting the biggest daily losses in six months.

Backed by the US dollar weakness, AUD/USD extended early Friday's gains taken from upbeat second-tier data at home, ignoring downside figures from China. However, the bulls currently need a strong push to the north which seems lacking considering the vaccine optimism from the European Union’s (EU) deal and the UK election results, not to for Iran’s readiness to rejoin International Atomic Energy Agency (IAEA).

Looking forward, National Australia Bank’s (NAB) Business Confidence and Business Conditions for April will accompany March’s final reading of Retail Sales to direct near-term AUD/USD moves. Given the scheduled figures are likely to offer no major surprises, traders will keep their eyes on the risk news and the coronavirus (COVID-19) or vaccine could be a bet.

Technical analysis

A clear break above the 0.7820 hurdle, comprising multiple tops marked since early January, enables AUD/USD bulls to aim for the 0.8000 psychological magnet. However, the 0.7880 and the 0.7900 resistances levels may test the upside momentum. Meanwhile, a daily closing below 0.7820 should defy the breakout but bears may remain cautious until the pair stays above 0.7710-15 region, including 100-day and 50-day SMA.


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