AUD/USD pares losses and returns to 0.6600 with US Dollar strength easing
- The Aussie is shrugging off bearish pressure to regain lost ground.
- A brighter market mood and a somewhat softer US Dollar are buoying the AUD.
- AUD/USD needs to confirm above 0.6600 to set its focus at the 0.6650 key resistance area.
The Australian Dollar is building up some positive momentum on Friday’s European session. The brighter sentiment, with European markets trading in a moderately positive tone, and some profit-taking after the sharp US dollar rally seen this week are pushing the Aussie higher.
The US Dollar loses steam as market sentiment improves
The US Dollar Index is practically flat on the day, capped below one-month highs for the third consecutive day. The rally on US Treasury yields has lost steam and the Dollar might need some new arguments to extend January's 2.8% rally.
Recent data from the US has been USD-supportive. Jobless claims declined against expectations last week, which endorses the view of a resilient economy and adds to evidence that the market had got ahead of itself with rate cut expectations in December.
Beyond that, data from China confirmed that the world’s second target economy is struggling. The fourth quarter’s GDP and Retail Sales came below expectations, leaving investors anxious for bolder stimulus measures, and increasing negative pressure on the China-proxy AUD.
AUD/USD Technical analysis
The Australian Dollar is correcting higher on Friday, coming up from strongly oversold levels after a 4.5% sell-off in January. The pair is now pushing against resistance at the 0.6600 area heading to a stronger resistance area, at 0.6640/50.
On the downside, a bearish reversal below 0.6520 would resume the broader bearish trend and increase pressure towards 0.6450.
Technical levels to watch