AUD/USD sits near 1.5 year top above 0.7200 ahead of a busy day

AUD/USD bulls catch a breather around 0.7230 amid the Friday morning in Asia. The pair recently ticked down to 0.7213 before bouncing back to the 0.7225-40 area that has been restricting the moves since the late-US session. It’s worth mentioning that the Aussie bulls attacked the year 2019 top the previous day while flashing a high of 0.7240, which was one-pip down from Wednesday’s top of 0.7241.

Why aren’t we worried?

If AUD/USD is considered as the market’s risk barometer then why it is ignoring the coronavirus (COVID-19) woes and US policymakers’ disagreement over stimulus, not to forget economic fears and Sino-American tussle? The answer lies in broad US dollar declines.

Although Australian PM Scott Morrison anticipates the downbeat impact of Victoria’s pandemic on the economy, there are many reasons for the USD to extend its south-run. The American Senators keep rolling on the stimulus decision, fears of downbeat employment data and the spread of the deadly virus are notable among them. While the recent recovery in the US Jobless Claims, from 1415K forecast to 1186K, disturbs the bears, the figures are past-NFP survey week and hence will not affect today’s key US employment data for July.

Against this backdrop, Wall Street keeps cheering hopes of further stimulus but the US 10-year Treasury yields linger around 0.54%.

Australia’s AiG Performance of Services Index for July, prior 31.5, will be the immediate catalyst ahead of the RBA’s Monetary Policy Statement (MPS) and China’s July month trade data to check. RBA’s MPS is most likely to reiterate its dovish tone with a downward revision to economic forecast and raise challenges for the Aussie pair’s latest upside. Further, China’s trade surplus is also likely to recede from $46.42B to $42B and may add downside pressure on the quote. However, market players are expected to follow the pre-NFP trading lull unless any extreme surprises, which in turn highlights the US Jobs Report as the key.

Read: Nonfarm Payrolls Preview: Hints point to an awful July

Additionally, today might be the last day for the US policymakers to agree on the unemployment claims before they head for August vacation, which in turn keeps stimulus headlines in focus.

Technical analysis

Sustained break of 0.7200 gives a free hit to attack the year 2019 top surrounding 0.7300. Alternatively, an ascending trend line from May 22 joins 21-day EMA to limit downside around 0.7110-0.7100 during the quote’s declines past-0.7200.