AUD/USD bulls struggle under 0.7600, shrug off market optimism

• AUD/USD pauses four-day uptrend, eases from immediate range resistance.
• Market sentiment improves on Biden’s infrastructure deal passage, soft US data backing Fed.
• Aussie-China tussles, Fed’s removal of pandemic restrictions on banks and covid fears probe bulls.
• Light calendar, quarter-end can keep markets dicey, risk catalysts remain as the key.

AUD/USD struggles to add to the first weekly gain in three, easing to 0.7580 at the start of Friday’s Asian session. Even so, the Aussie pair benefits from the risk-on mood while rising for the last four days at a stretch, snapping a two-week downtrend.

The passage of US President Joe Biden’s infrastructure spending and a bit softer US data favored the market mood and the AUD/USD prices. On the contrary, chatters over Fed’s dialing back of qualitative measures introduced during the pandemic and fears of the escalating Western tussles with China, not to forget covid variant woes, test the Aussie bulls.

After haggling over months, US Senators managed to agree over the much-awaited stimulus package, backed by President Biden, ahead of a two-week holiday period. “The plan is expected to increase federal spending by nearly $600 billion but leave many of President Biden’s economic proposals, including investments in child care and much of his climate agenda, for a future bill,” said New York Times.

Also favoring to sentiment were weaker than expected prints of US Durable Goods Orders and a bit high Jobless Claims, not to forget confirmation of 6.4% US GDP. The data suggests that the world’s largest economy is hitting a plateau, easing the burden from the Fed as they battle against reflation fears and tapering talks.

Alternatively, the US Federal Reserve (Fed) recently announced that the banks pass the stress test to lift the covid-led restrictions on share buybacks after June 30. This suggests the US central bank is recalling the reliefs offered during the pandemic, an indirect way of tightening. Additionally, China’s dislike of Aussie complaints about the anti-trade behavior of Beijing joins the US warships passing through Taiwan Straits offer extra burden on the risk appetite. It’s worth noting that the Delta Plus variant of the covid has become another strain for the traders.

Amid these plays, also the month-end and quarter-end mood, equities remained upbeat and so do the US Treasury yields. However, the US dollar index seesawed between gains and losses by the end of Thursday’s North American trading session.

Moving on, a lack of major data/events in Asia, coupled with the already witnessed outcome of US infrastructure spending and the key data of the week, AUD/USD may remain sidelined and can consolidate recent gains. However, qualitative factors become crucial to watch for fresh impulse.

Technical analysis

AUD/USD sustains 200-DMA breakout, suggesting further advances toward the 0.7600 and 0.7640-45 resistances until the quote stays beyond 0.7555 levels comprising the key moving average.