AUD/USD pulled back towards 0.7220s amid thin liquidity conditions on Christmas eve

The AUD/USD slides during the late European trading session, down some 0.33% trading at 0.7224 at the time of writing. The market sentiment is upbeat, as shown by some European bourses that opened on Friday. However, thin liquidity conditions spurred by some financial centers closed on Christmas eve, keeping the greenback on the bid against most G8 currencies.

The week witnessed a late Santa rally spurred by positive news on the Covid-19 front. On Tuesday, a study in South Africa reported that people infected with the Omicron variant were 80% less susceptible to needing hospitalization. That, alongside the US Food and Drug Administration (FDA) approving Covid-19 treatments by Pfizer and Merck, was the last piece of the puzzle that prompted the US S&P 500 towards a new all-time high around 4700.

Those events ultimately benefitted risk-sensitive currencies in the FX market, like the AUD.  The Australian dollar rallied some 150-pips since Tuesday, but as of today, a pullback towards 0.7220s appears to be a pause necessary before challenging of breaking essential resistance levels.

AUD/USD Price Forecast: Technical outlook

The AUD/USD daily chart depicts the pair has a downward bias, as the daily moving averages (DMAs) reside above the spot price. Nevertheless, the recent upside move stalled some 40-pips short of the confluence of the 50 and the 100-day moving averages (DMAs), which lie at 0.7280 and 0.7294, respectively.

In the event of breaking above the aforementioned levels, that would pave the way for further gains, exposing crucial resistance levels. The first one would be November’s 15 swing high at 0.7371, followed by 0.7400.