AUD/USD stays directed towards 0.7800 ahead of Australia trade data, RBA

• AUD/USD keeps the week-start recovery moves in a choppy range around mid 0.7700s.
• May begins with upbeat market sentiment despite off in key Asia-Pacific markets, light calendar and geopolitical risks.
• US ISM Manufacturing PMI eased, Fed’s Powell sounds more optimistic.
• Likely upbeat Aussie trade figures may entertain pair buyers ahead of RBA’s expected inaction.

Following an upbeat start to the month, AUD/USD wavers inside the 0.7750-70 trading range ahead of the key events on early Tuesday morning in Asia. The Aussie pair consolidated Friday’s losses the previous day amid a mild risk-on mood, softer US data and less volatility. However, the pair traders seem to get cautious off-late as Australia’s March month Trade Balance and RBA are on the cards.

More upside?

AUD/USD resisted notable moves during early Monday amid off in China and Japan. However, the quote benefited from the US ISM Manufacturing PMI for April, 60.7 versus 65.00 expected, as well as risk-positive comments from Fed Chairman Jerome Powell. While the key US activity number remained close to the multi-year high flashed the previous day, its pullback raised concerns that the latest recovery in US data is reliable. Further, Powell said, “US economic outlook has clearly brightened.” Both these catalysts seem to pave the strong ground for the risk barometer, namely the Aussie pair.

Also positive could be the latest updates from the New York Times (NYT) suggesting the US Food and Drug Administration (FDA) s said to be preparing to expand the use of Pfizer’s coronavirus vaccine to adolescents as young as 12 by next week, opening up the nation’s vaccination campaign to millions more Americans.

On the contrary, New Zealand’s entry to the club that’s uneasy with China, as well as US Secretary of State Antony Blinken’s readiness to tab Beijing if it behaves, test the market optimism. Additionally, worsening coronavirus (COVID-19) conditions in India and Japan as well as the failure of the US-Iran nuclear talks, for now, challenge the risk-on mood.

Amid these plays, Wall Street closed mixed, with tech stocks trimming April’s gains, whereas the US 10-year Treasury yields dropped 3.2 basis points (bps) to 1.59% by the end of Monday’s North American session.

Looking forward, hopes of a strong Aussie Trade Balance for April, expected 8000M versus 7529M prior, as well as likely inaction from the Reserve Bank of Australia (RBA), may keep AUD/USD on the way to the previous month’s top. The RBA is expected to keep the benchmark rate unchanged at 0.10% while also holding the bond purchase program intact during today’s meeting. However, major attention will be on the central bank statements that could suggest a timely end to the term funding facility (TFF), scheduled for June, amid an upbeat economic scenario.

Technical analysis

Not only a sustained bounce off 100-day SMA but the pair’s sustained bounce off 0.7690-95 horizontal support area, comprising lows marked in late February and April, well as March 29 top, favor AUD/USD bulls to aim for 0.7820 hurdle, near to the previous month’s peak.