AUD/USD: Well-set for 0.7300 on firmer sentiment, US Durable Goods Orders, PCE Inflation eyed

• AUD/USD grinds higher around weekly top after crossing key hurdle to the north.
• Aussie cabinet meeting showed confidence in overcoming the virus variant.
• Omicron, US BBB updates favored risk appetite, mixed data from Australia, US got mostly ignored.
• Key US data, risk catalysts are the key before Christmas Eve.

AUD/USD defends 0.7200 resistance breakout, taking rounds to 0.7215-20 during early Thursday morning in Asia.

In doing so, the Aussie pair remains near the monthly peak of 0.7225, which holds the gate for a rally towards the 0.7300 hurdles. That said, the quote became the biggest currency pair gainer among the Group of Ten (G10) on Wednesday as market sentiment remained firmer.

Although rising virus cases and fears of not so happening year-end celebrations prevail, positive news about the cure and nature of the South African covid variant, dubbed as Omicron, favored the risk appetite of late. After US Army conveyed positive updates for a single vaccine to battle covid and all variants, the US Food and Drug Administration (FDA) approved a pill from Pfizer to treat Covid-19.

Adding to the Omicron-linked market optimism was the Aussie cabinet’s “easy play” to tame the virus strain, by pushing for caution and masks but not reducing the gap between two-shots and booster vaccinations.

Elsewhere, positive updates concerning US President Joe Biden's Build Back Better (BBB) stimulus add to the brighter mood and underpin the AUD/USD prices, due to the pair’s risk barometer status. "We believe that Senator Manchin has been engaging with us over the course of time and months in good faith," White House spokeswoman Jen Psaki told reporters. "There will be more negotiations, no doubt about it. Everybody stay tuned and settle in," per Reuters.

On a different page, hawkish expectations concerning Australia’s main export item iron ore also favor the AUD/USD bulls.

It’s worth noting that the Sino-American tension and the US-Russia tussles remain on the table but were ignored. So do the mostly firmer US data and downbeat Aussie figures. That said. the US Q3 GDP rose past the 2.1% forecast to 2.3% whereas the CB Consumer Confidence for December came in better than upwardly revised 111.9 prior to 115.8. On the other hand, Australia Westpac Leading Index for November dropped below 0.27% to 0.12%.

Amid these plays, the Wall Street benchmarks had a second positive day while the US 10-year Treasury yields and the Dollar Index (DXY) marked a negative daily closing by the end of Wednesday’s North America session. 

Looking forward, US November PCE inflation and Durable Goods Orders will be crucial to watch amid hopes of a faster Fed rate hike, starting with early 2022. Also important to watch will be the risk catalysts stated above.

Technical analysis

A clear upside break of the 200-SMA and monthly resistance line, close to 0.7200, gains support from bullish MACD signals and firmer RSI to direct AUD/USD buyers towards a horizontal area stretched from November 11, 0.7295-7300. However, a sustained rise past the monthly high near 0.7225 becomes necessary for the bulls.