AUD/USD recovers early lost ground, climbs to fresh weekly high around 0.7155 region

• AUD/USD attracted some dip-buying on Wednesday and bounced over 35 pips from the daily low.
• Easing Omicron fears extended support to the perceived riskier aussie and provided a modest lift.
• The Fed’s hawkish outlook acted as a tailwind for the USD and capped any further gains for the pair.

The AUD/USD pair climbed back above mid-0.7100s during the first half of the European session and refreshed the weekly high in the last hour.

The pair attracted some dip-buying near the 0.7120 region on Wednesday and is now looking to build on this week's bounce from the 0.7080 area or the lowest level since December 7. Reports that the current vaccines may be more effective than first thought in fighting the Omicron variant boosted investors' confidence. This, in turn, was seen as a key factor that extended some support to the perceived riskier aussie.

Apart from this, a fresh leg down in the US Treasury bond yields undermined the safe-haven US dollar and contributed to the AUD/USD pair's goodish intraday bounce of around 35 pips. That said, the Fed's hawkish outlook acted as a tailwind for the greenback and capped gains for the major. It is worth recalling that the so-called dot plot indicated that Fed officials expect to raise the fed funds rate at least three times next year.

Investors also seemed reluctant to place aggressive bets amid relatively thin liquidity conditions heading into the end-of-year holiday season. This, in turn, warrants some caution for bullish traders and before positioning for any further gains. Market participants now look forward to the US economic docket, highlighting the release of the final Q3 GDP print and the Conference Board's Consumer Confidence Index for a fresh impetus.

Apart from this, the US bond yields will influence the USD price dynamics. Traders will further take cues from developments surrounding the coronavirus saga and the broader market risk sentiment to grab some short-term opportunities around the AUD/USD pair.

Technical levels to watch