AUD/USD edges higher toward 0.7750, stays on track to end week flat

The AUD/USD pair staged a decisive rebound following Thursday's drop and touched a fresh daily high of 0.7747 during the American trading hours on Friday. As of writing, the pair was up 0.48% on a daily basis at 0.7742. Despite Friday's recovery, AUD/USD remains on track to close the week flat.

Earlier in the day, the broad-based selling pressure surrounding the greenback helped AUD/USD gain traction. With Wall Street's main indexes pushing higher after the opening bell, the USD struggled to find demand and the US Dollar Index (DXY) dropped below 91.00.

The data published by the IHS Markit showed on Friday that the economic activity in the US private sector continued to expand at an unprecedented pace with the Composite PMI reaching a series-high of 62.2 in April. Moreover, the Services PMI and the Manufacturing PMI came in at 60.6 and 63.1, respectively, both reading beating analysts' estimates.

However, the underlying details of the PMI report revealed that input prices continued to rise sharply and producers started to pass those increases to their clients, reviving concerns over high inflation. The 10-year US Treasury bond yield moved into the positive territory and helped the DXY limit its losses. 

AUD/USD near-term outlook

Credit Suisse analysts think AUD/USD could push lower with a sustained move below 0.7700/0.7690 support area and target 0.7680/0.7674 next. 

"Beneath here would open up a move back to 0.7588/86, then the 0.7532 low. Removal of here would decisively reassert the broader topping theme and end the new, broader range," analysts added. "Only above 0.7839/49 would resolve the range to the upside and instead confirm a resumption of the broader bull trend, suggesting a quick move to 0.7900/05 and then the 2021 high at 0.8000/07.”

Additional levels to watch for