AUD/USD holds steady above 0.7300 mark, lacks follow-through

• AUD/USD gained some traction on Friday and recovered further from weekly lows.
• The prevalent selling bias surrounding the USD extended some support to the major.
• A cautious mood around the equity markets held bulls from placing aggressive bets.

The AUD/USD pair edged higher for the sixth consecutive session on Friday, albeit lacked any strong follow-through and remained confined in a familiar trading range.

The pair built on the previous day’s goodish bounce of around 60 pips from weekly lows and gained some follow-through traction on the last trading day of the week. The prevalent selling bias surrounding the US dollar was seen as one of the key factors lending some support to the AUD/USD pair.

As investors looked past the Fed’s upbeat assessment of the US economic recovery, the greenback came under some renewed selling pressure following Thursday’s rather unimpressive US economic data. In fact, the Philly Fed Manufacturing Index edged lower to 15 in September from 17.2 previous, while the Initial Jobless Claims, Building Permits and Housing Starts all fell short of market expectations.

However, a softer risk tone – as depicted by a cautious mood around the equity markets – held investors from buying the perceived riskier Australian dollar. This, in turn, kept a lid on any runaway rally for the AUD/USD pair, at least for the time being.

Even from a technical perspective, the pair has been oscillating in a range over the past one week or so. This makes it prudent to wait for some strong follow-through buying before positioning for any further gains towards reclaiming the 0.7400 mark en-route YTD tops, around the 0.7415 region.

Market participants now look forward to the release of the Michigan Consumer Sentiment Index for September. The data might influence the USD price dynamics, which, along with the broader market risk sentiment, might assist traders to grab some meaningful opportunities.

Technical levels to watch