AUD/USD holds steady near weekly tops, just below mid-0.6900s

The AUD/USD pair held on to its modest gains around the 0.6935-40 region and remains well within the striking distance of weekly tops set on Thursday.

Following the previous day's modest intraday pullback, the pair edged higher during the Asian session on Friday and was being supported by a mildly softer tone surrounding the US dollar. Optimism over a potential COVID-19 vaccine remained support of the risk-on mood, which undermined demand for the safe-haven US dollar and benefitted the perceived riskier Australian dollar.

The global risk sentiment was further supported by Friday's better-than-expected China's Caixin Services PMI, which jumped to the highest since April 2010 and came in at 58.4 in June. The data added to Thursday's stellar NFP report and offered further evidence that the worse of coronavirus pandemic was probably over, reviving hopes of a sharp V-shaped global economic recovery.

However, growing worries about a continuous surge in the number of coronavirus cases discouraged investors from taking excessive risk and kept a lid on any strong gains for the AUD/USD pair. Investors remain concerned that the continuous rise in COVID-19 cases across the world could trigger renewed lockdown measures to contain the spread and delay economic recovery.

Meanwhile, traders also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines amid relatively thin liquidity conditions. Given that the US markets will remain close in observance of Independence Day, the AUD/USD pair seems more likely to continue with its range-bound trading action, warranting some caution before placing any directional bets.

Technical levels to watch