AUD/USD rises firmly above 0.7150 ahead of US NFP report.

• The Australian dollar advances strongly on the week, rising 2.29%.
• The market sentiment of the FX complex is mixed, led by the EUR and antipodeans.
• AUD/USD has a bias to the downside, although there is an advantage towards the 20-DMA at 0.7252.

The AUD it extends its weekly gains on Thursday and is trading at 0.7152 at the time of writing. Market sentiment is bearish on equity markets. European and US stock indices are trading lower.

Meanwhile, in the FX complex, the market mood is mixed. The strongest currency is the EUR, followed by the antipodes, while the JPY is the laggard.

The US Dollar Index, a gauge of the dollar’s value against its peers, lost 0.44% to settle at 95.51. By contrast, US Treasury yields are higher, with the 2-year Treasury yield reaching a daily high of 1,204% but retreating to 1,189% at press time.

Mixed US macro data weighs on the USD

The US economic calendar presented the ISM non-manufacturing PMI for January, which came in at 59.9, four tenths higher than the 59.5 forecast by analysts, but below December’s reading of 62.3.

Anthony Nieves, chair of ISM’s Services Business Committee, said “Respondents continue to be affected by supply chain issues related to the coronavirus pandemic, including capacity constraints, demand inflation, challenges logistics and labor shortages. As for the impact of the Covid-19-Omicron variant, he stated that it “disrupted operations”, mainly due to staff shortages.

Initial jobless claims for the week ending January 29 came in at 238,000, better than the 245,000 forecast by analysts, and lower than the previous week’s upwardly revised 261,000. The market ignored the figures and the pair did not react either.

That said, the AUD/USD trader’s focus is on the US Non-Farm Payrolls report for January, which is expected at 199,000. However, Wednesday’s ADP report with companies cutting 300,000 jobs could be a prelude to the figure.

AUD/USD Price Forecast: Technical Outlook

AUD/USD remains biased to the downside from a technical perspective. The daily moving averages (DMA) are above the spot price, with the 50 DMA at 0.7163. However, recent fundamental developments and market sentiment cannot be ruled out and will put upward pressure on the pair.

So, in the short term, an AUD/USD test for the confluence of the 100 DMA and a three month downtrend line around 0.7250-60 is on the cards. However, there would be some obstacles on the way up. The first resistance would be the aforementioned 50 DMA at 0.7163. A break would expose 0.7200, followed by the aforementioned target.

Additional technical levels