AUD/USD eases from tops, still well bid around 0.7400 mark

• AUD/USD regained positive traction on Thursday, though the upside remains limited.
• A modest pickup in the USD demand capped any meaningful gains amid COVID-19 woes.
• Traders also seemed reluctant ahead of Friday’s release of the US monthly jobs report (NFP).

The AUD/USD pair witnessed some selling during the early North American session and slipped back below the 0.7400 round-figure mark in the last hour.

Following the previous day's sharp pullback of over 55 pips from near three-week tops, the AUD/USD pair managed to regain some positive traction on Thursday, though lacked any follow-through. The overnight hawkish comments by Fed Vice Chair Richard Clarida acted as a tailwind for the US dollar and capped the upside for the major.

Clarida took a more hawkish turn and signalled a move to taper bond buying later this year or early 2022 depending on how the labor market fared in the next few months. Clarida further added that conditions for an interest rate hike could be met in late 2022 and forced investors to bring forward the likely timing of a policy tightening.

The USD was further supported by some follow-through uptick in the US Treasury bond yields. On the economic data front, the US Initial Weekly Jobless Claims fell to 385K during the week ended July 30 from 400K previous. This was mostly in line with consensus estimates pointing to a reading of 384K and did little to provide any meaningful impetus.

Meanwhile, a generally positive tone around the equity markets capped gains for the safe-haven USD and extended some support to the perceived riskier aussie. That said, concerns about the economic fallout from the fast-spreading Delta variant of the coronavirus should keep a lid on any runaway rally for the AUD/USD pair, at least for the time being.

Investors might also refrain from placing any aggressive bets, rather prefer to wait on the sidelines ahead of Friday's release of the closely-watched US monthly jobs report (NFP). Hence, it will be prudent to wait for a sustained move beyond the overnight swing highs, around the 0.7425 region, before positioning for any further gains.

Technical levels to watch