The AUD/USD pair maintained its strong bid tone through the early European session and was last seen trading around the 0.7215-20 region, or a near three-week high.
A combination of supporting factors assisted the AUD/USD pair to capitalize on the overnight bounce from the 0.7090 support and scale higher for the second successive day on Thursday. Upbeat employment figures from Australia, along with the prevalent risk-on mood acted as a tailwind for the perceived riskier aussie.
On the other hand, the US dollar extended the post-FOMC retracement slide from the vicinity of a 16-month high and remained depressed through the major part of the European session. This, in turn, provided an additional boost to the AUD/USD pair and allowed bulls to clear the 0.7180-85 strong resistance zone.
Meanwhile, data released from the US showed that the Initial Weekly Jobless Claims rose to 206K last week as against 195K anticipated and 188K previous. Separately, the Philly Fed Manufacturing Index fell more than expected and overshadowed upbeat housing market data – Building Permits and Housing Starts – and failed to lend any support to the USD.
Meanwhile, the ongoing positive move could further be attributed to some technical buying, though the upside potential still seems limited amid fresh COVID-19 jitters. A sharp rise in daily coronavirus cases in Australia's largest state by population – New South Wales – might hold back bulls from placing aggressive bets.
Apart from this, the RBA Governor Philip Lowe's efforts to push back against expectations for a rate hike in 2022 could keep a lid on any meaningful gains for the AUD/USD pair. This warrants some caution before positioning for an extension of the recent recovery move from sub-0.7000 levels, or a one-year low touched earlier this month.
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