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  • AUD/USD gained traction for the second consecutive session on Thursday.
  • Rallying US bond yields underpinned the USD and capped gains for the pair.

The AUD/USD pair traded with a mild positive bias through the early European session, albeit lacked any follow-through and remained capped below mid-1.7600s.

The pair edged higher for the second consecutive session on Thursday and recovered further from six-week lows, around the 0.7565 region set earlier this week. The aussie benefitted from a rise in Australian trade surplus in December, though some follow-through US dollar buying kept a lid on any meaningful upside.

Signs of progress on additional US stimulus measures pushed the yield on the benchmark 10-year government bond to near 10-month high touched in January. This was seen as one of the key factors that continued underpinning the USD, which got an additional boost from Wednesday’s mostly upbeat US economic releases.

In fact, the ADP report showed that private-sector employment in the US grew 174K in January. Adding to this, the employment sub-component of the US ISM services sector report showed a significant increase in the previous month and lifted expectations for the official non-farm payrolls (NFP), due for release on Friday.

Apart from this, some cautiousness around the equity markets extended some additional support to the greenback’s relative safe-haven status and capped gains for the perceived riskier aussie. This makes it prudent to wait for a sustained move beyond the 0.7650-60 region before positioning for any further appreciating move.

Market participants now look forward to the release of the Initial Weekly Jobless Claims data from the US for some impetus. This, along with the US stimulus headlines, might influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities.

Technical levels to watch