AUD/USD reverses early gains, flirting with lows near 0.7400 handle

The AUD/USD pair reversed upbeat Australian retail sales data-led tepid gains and has now drifted into negative territory amid weaker commodity prices.

Currently flirting with 0.7400 handle, the pair initially built on to Thursday's recovery, led by upbeat Chinese manufacturing PMI, and touched a session peak level of 0.7433 after Australia's monthly retail sales surpassed expectations and came-in to show a growth of 0.5% m-o-m as compared to 0.3% growth expected and slightly lower than a growth of 0.6% recorded in the previous month.

The pair, however, quickly turned lower as the prevalent weak sentiment surrounding commodity markets and Asian equities is weighing on riskier / higher-yielding currencies - like the Aussie, which otherwise might have gained traction in wake of a broad based US Dollar pull-back. 

Market's key focus on Friday would be on the keenly watched US monthly jobs report, scheduled for release later during NA session, which would determine the next leg of directional move for the US Dollar and eventually provide fresh impetus for the pair's near-term trajectory. In the meantime, broader market risk sentiment, especially in commodity space, would be a key drive for the pair's movement heading into the big event risk. 

Technical levels to watch

On a sustained weakness below 0.7400 handle, the pair is likely to drift towards 0.7470 support (yesterday's low) below which a fresh bout of selling pressure is likely to drag it further towards its next major support near 0.7435-30 region. On the upside, momentum back above 0.7420 level now seems to lift the pair beyond session peak towards 0.7445 resistance area en-route an important resistance near 0.7480 region.