AUD/USD climbs to fresh daily high, holds comfortably above 0.7500 ahead of NFP

• AUD/USD regained positive traction on Friday amid a generally positive risk tone.
• Some follow-through USD buying should cap the upside ahead of the US jobs data.
• The uncertainty over Ukraine might further hold back bulls from placing fresh bets.

The AUD/USD pair maintained its bid tone heading into the North American session and was last seen trading near the daily high, around the 0.7515-0.7520 region.

The pair attracted fresh buying on the last day of the week and reversed the overnight modest losses amid a positive risk tone, which tends to benefit the perceived riskier aussie. Despite a breakthrough in the Russia-Ukraine peace negotiations, hopes for a diplomatic solution to end the war boosted investors' confidence ahead of the resumption of talks on Friday.

The market sentiment, however, remains fragile amid the risk of a further escalation in the Russia-Ukraine conflict. In fact, Ukraine's President Volodymyr Zelensky warned that Russia is consolidating and preparing powerful strikes in the besieged Mariupol. This, along with hawkish Fed expectations, underpinned the US dollar and should cap gains for the AUD/USD pair.

Investors seem convinced that the Fed would hike interest rates by 100 bps over the next two meetings to combat stubbornly high inflation. This was evident from a fresh leg up in the US Treasury bond yields, which assisted the buck to capitalize on the overnight recovery move from a nearly two-week low. The USD bulls, however, seemed reluctant ahead of the US monthly jobs data.

The popularly known NFP report, scheduled for release during the early North American session, will influence market expectations about the Fed's next policy move. Apart from this, fresh developments surrounding the Russia-Ukraine saga should drive the USD demand. This, in turn, should provide a fresh impetus to the AUD/USD pair and allow traders to grab some short-term opportunities.

From a technical perspective, the AUD/USD pair has been oscillating in a familiar range over the past one week or so. This comes on the back of the recent rally from sub-0.7000 levels, or the YTD low and could be categorized as a bullish consolidation phase. That said, it will be prudent to wait for sustained breakout through the said trading band before positioning for any further gains.

Technical levels to watch