AUD/USD struggles for a firm direction, stuck in a narrow band above 0.6700 mark

The AUD/USD pair struggles to capitalize on the overnight bounce from the 0.6670-0.6665 area, or a one-week low and seesaws between tepid gains/minor losses on Thursday. The pair holds steady above the 0.6700 mark through the early part of the European session, awaiting a fresh catalyst before the next leg of a directional move.

The downside for the AUD/USD pair, meanwhile, remains cushioned amid subdued US Dollar demand and optimism over the easing of COVID-19 restrictions in China. That said, growing worries about a deeper global economic downturn act as a headwind for the risk-sentiment Aussie. Traders also seem reluctant to place aggressive directional bets amid the uncertainty over the Fed's rate hike path.

It is worth mentioning that the markets have been pricing in a greater chance of a relatively smaller 50 bps Fed rate hike move in December. The incoming positive US macro data, however, suggested that the economy remained resilient and fueled speculations that the Fed might lift rates more than projected. This leads to a goodish rebound in the US Treasury bonds yields and offers support to the USD.

Hence, the focus will remain glued to the highly-anticipated FOMC monetary policy meeting on December 13-14. In the meantime, the mixed fundamental backdrop warrants some caution before positioning for a firm near-term direction. This, in turn, supports prospects for an extension of the range-bound price action around the AUD/USD pair as traders look to the US Initial Jobless Claims for some impetus.

Technical levels to watch