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  • AUD/USD staged a goodish rebound on Friday amid some USD profit-taking.
  • The risk-on mood provided an additional lift to the perceived riskier aussie.
  • A combination of factors might keep a lid on any further gains for the major.

The AUD/USD pair built on its steady intraday positive move and refreshed daily tops, around the 0.7625 region heading into the European session.

Following the previous day’s two-way/directionless price moves, the pair managed to gain some positive traction on Friday and stage a goodish rebound from the vicinity of YTD lows. A generally positive risk tone prompted some profit-taking around the safe-haven US dollar and drove some flows towards the perceived riskier aussie.

Apart from this, the uptick lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly. The upbeat US economic outlook might continue to underpin the greenback. Apart from this, tensions between China and Australia might further collaborate to keep a lid on any meaningful upside for the AUD/USD pair.

Thursday’s better than expected US Jobless Claims, which fell to a one-year low of 684K, reinforced the narrative of a relatively faster US economic recovery. Adding to the optimism, US President Joe Biden – in his first formal news conference on Thursday – made an ambitious pledge of administering 200 million vaccine shots in 100 days.

Meanwhile, Australia’s ambassador to China, Graham Fletcher was noted saying that China has been exposed as quite unreliable as a trading partner and even vindictive. This added to concerns about a further escalation of diplomatic tensions between China and Western countries, which should cap gains for the Australian dollar.

Market participants now look forward to the US economic docket, featuring the releases of Personal Income/Spending figures for February, Core PCE Price Index and Michigan Consumer Sentiment index. The data could provide further hints about the US economic strength, which, in turn, might influence the USD and provide some impetus to the AUD/USD pair.

Technical levels to watch