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  • AUD/USD keeps pullback from 0.7108, snapped a three-day losing streak on Wednesday.
  • Market sentiment improved on upbeat US data, no major negatives from US-China.
  • S&P500 refreshed record tops, Gold also bounced from $1,860.
  • US Senators struggle to renegotiate the stimulus, Australian employment for July will be the key.

AUD/USD eases from the previous day’s top, flashed a few hours back, to 0.7160 at the start of Thursday’s Asian session. Even so, the quote remains on the front-foot while carrying the U-turn from 21-day EMA. While broad risk-on mood could be cited for the pair’s earlier upbeat performance, doubts over the US aid package negotiations recently seem to exert the downside pressure.

Bulls cheer gains of equities, gold despite downbeat concerns at home…

Although Australia’s Wage Price Index and Westpac Consumer Confidence flashed unwelcomed figures the previous day, AUD/USD prices managed to snap the three-day declines. The reason could be traced from the market’s optimism surrounding the recovery in the world’s largest economy, as portrayed by the latest inflation data. Following the upbeat performance of the Producers Price Index (PPI), the US Consumer Price Index (CPI) also beat expectations while rising double the forecast of 0.3% to 0.6% in July.

Other than the upbeat data, an absence of negatives from the Sino-American tussle frontier also helped the trading sentiment to remain positive. Although US President Donald Trump said the phase one deal means “very little” to him, Chinese diplomats have off-late shown serious concerns to back the negotiations. The same could be witnessed in their agricultural buying from America, as per the White House Adviser Larry Kudlow.

Elsewhere, the coronavirus (COVID-19) statistics in the US have recently being doubted as the fall in the new cases joined a decline in the testing. On the other hand, Victoria’s also step back but stay above 400.

Against this backdrop, Wall Street flashed notable gains wherein the S&P 500 passed with flying colors by refreshing record high. The US 10-year Treasury yields also gained 1.5 basis points (bps) to 0.673% by the end of Wednesday.

Moving on, traders will keep eyes on July month’s employment data from Australia. Forecasts suggest Employment Change drop from 210.8K to 40K with a rise in Unemployment Change to 7.8% against 7.4% prior.

It should also be noted that the recently grim words from US Treasury Secretary Steve Mnuchin probes the bulls and makes it important for traders to keep a watch on risk catalysts as well.

Technical analysis

The pair’s bounce off 21-day EMA enables it to attack 0.7200 immediate resistance ahead of the monthly top near 0.7245. On the downside, 0.7065/60 area comprising July 24 low and June 10 high can offer an extra support past-0.7115 level including the short-term EMA.