AUD/USD: Good Friday tests recovery moves above 0.7600

AUD/USD attacks the upper end of the immediate 10-pip trading range, around 0.7610-20, as traders gear up for the Good Friday holiday. After refreshing the yearly low with 0.7531 figures during early Thursday, the aussie pair recovered heavily towards regaining the 0.7600 area amid broad US dollar weakness and a likely positioning ahead of a long weekend.

Treasury yields keep the driver’s seat…

Despite strong US ISM Manufacturing PMI, 64.7 versus 61.3 expected, not to forget growing fears of rejection to the US President Joe Biden’s $2.25 trillion infrastructure spending plan by Republicans in the Senate, AUD/USD could rise on Thursday. Behind the moves were the 6.7 basis points (bps) of drop, the heaviest in five weeks, by the US 10-year Treasury yield.

The US dollar index (DXY) also marked the biggest losses since March 17 while following the yields and paying a little heed to the catalysts at home.

Other than the strong US ISM Manufacturing PMI, versus the downbeat China Caixin Manufacturing PMI, China’s tussle with the West and US Republicans’ readiness to probe President’s infrastructure spending in the Senate could have also weighed on the AUD/USD but failed. Additionally, fresh lockdowns in France and Canada’s Ontario are likely an extra burden on the risk catalysts that might test the bulls.

On the contrary, only one community transmission in Brisbane allowed the government to call back the lockdown while staying strict for masks. Also on the risk-positive side was news that Pfizer’s covid cure is 100% effective on adolescents.

Amid these plays, Wall Street benchmarks cheered another stimulus, as well as hints for a few more, while positing over 1.0% gains each. Among them, S&P 500 refreshed the record top by crossing the 4,000 mark.

Looking forward, equity and bond markets close in Australia, New Zealand, Singapore and Hong Kong may negatively affect the AUD/USD moves. However, China and Japan are open, which in turn can offer mild liquidity ahead of US employment figures for March. It should be noted that bourses in Europe and the UK will also be closed for Good Friday, suggesting no major reaction to the otherwise key data. Hence, AUD/USD recovery is likely to be tested but beware of wild moves during the thin market liquidity.

Read: US Nonfarm Payrolls March Preview: Optimism and evidence this time?

Technical analysis

Despite faking the breakdown of 0.7562-57 key support zone, comprising lows marked since December 28, 2020, AUD/USD is yet to overcome 0.7630-35 resistance confluence comprising 100-day SMA and a two-week-old falling trend line. Hence, bears can stay hopeful but fresh selling should wait for a clear break below 0.7557.