AUD/USD exploring three-week highs above 0.7315

The Australian dollar is outperforming the rest of the major currencies on Thursday, appreciating beyond 0.6% against a somewhat weaker US dollar. The Aussie has extended its rebound from Wednesday’s lows at 0.7225 to test the top of the last three week’s trading range, at 0.7315/20 area.

The US dollar falters with US labour data on focus

The AUD has been favored by a certain US dollar weakness and a moderate appetite for risk to regain lost ground. The greenback is pulling back against its main rivals with investors reluctant to place large USD bets ahead of the release of September’s US Non-Farm Payrolls report.

With all eyes on the timing of the Federal Reserve’s next move, the market has assumed that a strong payrolls report on Friday will prompt the Bank to announce the kickstart of QE tapering in November.

Furthermore, the market mood has improved noticeably, which has reflected in higher equity markets. Wall Street is posting gains beyond 1% as investors’ concerns about the potential consequences of surging inflation levels have eased with oil prices pulled back from seven-year highs while fears of a government shutdown in the US seem to have taken the backseat for now.

AUD/USD remains negative while below 0.7370 – Commerzbank

In a broader context, Karen Jones, Head of FICC Technical Analysis at Commerzbank, however, sees the pair biased lower while below 0.7370: “AUD/USD near term strength is viewed as corrective. The market recently failed at the 4-month downtrend at .7370 and we will retain a negative bias while capped here. Initial resistance is the .7313 55-day ma.”

Technical levels to watch