AUD/USD eases from multi-week tops, still well bid above mid-0.7400s post-NFP
- AUD/USD maintained its strong bid tone and shot to fresh multi-week tops in the last hour.
- Disappointing NFP print weighed on the already weaker USD and provided a goodish boost.
- Rallying US bond yields could lend some support to the greenback and prompt profit-taking.
The AUD/USD pair jumped to fresh multi-week tops in the last hour, albeit quickly retreated few pips thereafter. The pair was last seen trading around the 0.7460-65 region, still up nearly 0.90% for the day.
The pair added to its intraday gains and got an additional lift during the early North American session in reaction to the mixed US monthly jobs report. The headline NFP print showed that the US economy added 235K new jobs in August as against consensus estimates pointing to a reading of 750K. The data forced investors to further push back their expectations about the likely timing when the Fed will begin rolling back its pandemic-era stimulus. This, in turn, exerted some additional pressure on the already weaker US dollar and pushed the AUD/USD pair to the highest level since mid-July.
Meanwhile, the additional details revealed that the unemployment rate fell to 5.2% during the reported month from 5.4% in July, matching expectations. Moreover, stronger wage growth data seems to have kept hopes for an imminent taper announcement at the November FOMC meeting. This was evident from a sharp spike in the US Treasury bond yields, which helped limit any deeper USD losses and kept a lid on any further gains for the AUD/USD pair, at least for the time being. That said, the underlying bullish sentiment remained supportive of the bid tone surrounding the perceived riskier aussie.
From a technical perspective, RSI on hourly charts is flashing extremely overbought conditions and warrants some caution before placing any fresh bullish bets. Investors might also be inclined to take some profits off the table, especially after the recent strong run-up of over 350 pips from YTD lows, around the 0.7100 round-figure mark touched on August 20. Hence, a modest pullback towards a strong resistance breakpoint, around the 0.7420-25 supply zone, looks like a distinct possibility.
Technical levels to watch