AUD/USD Eases From Two-Week High, Still Well Bid Above 0.6700 As Traders Await NFP

The AUD/USD pair climbs to a two-week high on Friday, albeit struggles to capitalize on the momentum beyond a technically significant 200-day Simple Moving Average (SMA). The pair, however, maintains its bid tone through the early European session and trades around the 0.6725-0.6730 region, still up over 0.50% for the day.

A combination of factors prompts fresh selling around the US Dollar, which, in turn, allows the AUD/USD pair to prolong its upward trajectory witnessed since the beginning of the current week. Concerns about the banking sector in the US, along with the Federal Reserve’s (Fed) less hawkish outlook, fail to assist the USD to build on the previous day’s bounce from over a one-week low.

Investors remain worried about a full-blown US banking crisis and now fear that regional lender PacWest Bancorp could be the next potential domino to fall. The US central bank, meanwhile, outlined a more stringent and data-driven approach to hiking rates further. Moreover, Fed Chair Jerome Powell signaled that the central bank was close to hitting the terminal speed of the current tightening cycle.

Apart from this, concerns over the US debt ceiling and a modest recovery in the US equity markets undermine the safe-haven Greenback and benefit the risk-sensitive Aussie. That said, a further recovery in the US Treasury bond yields helps limit losses for the USD and keeps a lid on the AUD/USD pair ahead of Friday’s release of the closely-watched US monthly employment details.

The popularly known Nonfarm Payrolls (NFP) report is due for release later during the early North American session. This will be key in influencing the near-term USD price dynamics and provide some meaningful impetus to the AUD/USD pair. Nevertheless, spot prices remain on track to register solid weekly gains and snap a two-week losing streak heading into the critical data risk.

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