Search ForexCrunch
  • The emergence of some USD selling assisted AUD/USD to gain traction in the last hour.
  • Mixed US jobs report for January exerted some additional pressure on the greenback.
  • Rallying US bond yields might help limit the USD downfall and cap gains for the major.

The AUD/USD pair rallied around 35-40 pips during the early North American session and jumped to an intraday high level of 0.7639 in reaction to mixed US jobs report.

The US dollar added to its modest intraday losses and retreated further from two-month tops after the headline NFP print showed that the US economy added 49K jobs in January as against 50K anticipated. The negative reading, to a larger extent, was offset by an unexpected fall in the unemployment rate to 6.3% from 6.7% previous, albeit did little to impress the USD bulls

A softer tone surrounding the USD was seen as a key factor that provided a modest lift to the AUD/USD pair. That said, the data remained supportive of the optimism about a strong US economic recovery. This along with firming expectations for a massive US fiscal spending pushed the yield of the benchmark 10-year government bond to near one-year tops, around the 1.176%.

This, in turn, extended some support to the greenback and kept a lid on any runaway rally for the AUD/USD pair, which has been oscillating in a narrow trading band over the past one week or so. This makes it prudent to wait for some strong follow-through buying, possibly beyond mid-0.7600s, before traders start positioning for any further near-term appreciating move.

With the key data risk out of the way, the USD bond yields will now play a key role in influencing the USD price dynamics. This, along with the broader market risk sentiment, will be looked upon for some short-term trading opportunities. Nevertheless, the AUD/USD pair remains on track to end nearly unchanged for the week, warranting some caution for aggressive traders.

Technical levels to watch