AUD/USD refreshes weekly top, around 0.7330-35 area amid positive risk tone/weaker USD

• AUD/USD gained traction for the third straight day and was supported by a combination of factors.
• The risk-on impulse weighed on the safe-haven USD and benefitted the perceived riskier aussie.
• Upbeat Australian jobs data further underpinned the domestic currency and remained supportive.
• The Fed's more hawkish outlook could act as a tailwind for the USD and cap the upside for the pair.

The AUD/USD pair extended its steady intraday ascent through the first half of the European session and climbed to a fresh weekly high, around the 0.7330-0.7335 region in the last hour.

A combination of supporting factors assisted the AUD/USD pair to build on this week's goodish rebound from the monthly low and gain positive traction for the third successive day on Thursday. The prevalent risk-on mood weighed on the safe-haven US dollar and benefitted the perceived riskier aussie, which further benefitted from upbeat Australian employment data.

Signs of progress in the Russia-Ukraine ceasefire talks raised hopes about a diplomatic solution to end the war. In fact, Ukrainian President Volodymyr Zelensky said negotiations were becoming more realistic while Russia noted that proposals under discussion were close to an agreement. This boosted investors' confidence and undermined traditional safe-haven assets.

The Australian dollar drew additional support from better-than-expected domestic data, which showed that the Unemployment Rate dropped to 4.0% in February from 4.2% in the previous month. Adding to this, the number of employed people rose by 77.4K during the reported month as compared to consensus estimates pointing to a rise to 37K from the 12.9K in January.

That said, the Fed's hawkish outlook, indicating that it could raise interest rates at all the six remaining meetings in 2022, should act as a tailwind for the buck. Moreover, Fed Chair Jerome Powell hinted that the US central bank could start shrinking its near $9 trillion balance sheet as soon as the next meeting in May. This might cap gains for the AUD/USD pair.

Market participants now look forward to the US economic docket, featuring the release of the Philly Fed Manufacturing Index, the usual Weekly Initial Jobless Claims and Industrial Production data. This, along with the fresh developments surrounding the Russia-Ukraine saga, the broader risk sentiment, will influence the USD and provide some impetus to the AUD/USD pair.

Technical levels to watch