AUD/USD trades at fresh-monthly highs above 0.7400

• AUD/USD breaks above 0.7400 for the first time in a month.
• Risk-on market sentiment turn investors towards riskier assets boosts the AUD.
• US Initial Jobless Claims dropped below the 300K mark.

The Australian dollar climbs 0.58% is trading at 0.7423 during the New York session at the time of writing. The market sentiment is upbeat, portrayed by European and US equity indexes in the green. Positive US macroeconomic data concerning the labor market and prices paid for US producers boost the investors’ risk appetite.

DXY breaks below 94.00, underpinned by falling US T-bond yields

The US Dollar Index that measures the greenback’s performance against a basket of six rivals is sliding 0.03%, at 93.99, while the US T-bond 10-year yield struggles to hold to previous day levels, sits at 1.526%, down almost two and a half basis points.

Data-wise, the Australian economic docket featured the employment report, which showed that the economy droped worse-than-expected 138K jobs in September, while the Unemployment Rate rose to 4.6%.  

On the US front, the US Initial Jobless Claims came at 293K better than the 319K foreseen by analysts, delivering positive news regarding the labor market while increasing the chances of the Federal Reserve reduction to the pace of the Quantitative Easing.  Further, the US Producer Price Index rose by 8.6% less than the 8.7% estimated, while excluding food and energy, expanded 6.8% lower than the 7.1% expected.

That said, positive news during the day benefited risk-sensitive currencies, like the Aussie, which reclaimed the 0.7400 thresholds. However, seesawing market sentiment due to changing economic conditions could put a lid on the AUD/USD.

AUD/USD Price Forecast: Technical outlook

Daily chart

The AUD/USD is trading above the 100-daily moving average (DMA) at 0.7416, whereas the 200-DMA is above the spot price, indicating the major trend is tilted to the downside. However, momentum indicators with the Relative Strength Index (RSI) at 64, pointing higher, suggests that the near-term trend is tilted to the upside.

For AUD/USD buyers to resume the upward trend, they need a daily close above the 100-DMA. In that outcome, the first resistance would be the September 3 high at 0.7478.  A breach of the latter could expose crucial support levels, the July 6 at 0.7599 and then the psychological 0.7700.