• The Australian dollar advances sharply in the week, 2.29%.
• The FX complex market sentiment is mixed, led by the EUR and the antipodeans.
• AUD/USD is downward biased though a leg-up towards the 100-DMA at 0.7252 is on the cards.

The Australian dollar extends its weekly gains on Thursday and is trading at 0.7152  at the time of writing. The market sentiment is downbeat in the equity markets. European and US stock indices print losses.

Meanwhile, in the FX complex, the market mood is mixed. The strongest currency is the EUR, followed by the antipodeans, whilst the JPY is the laggard. 
The US Dollar Index, a gauge of the greenback’s value against its peers, sheds 0.44%, sitting at 95.51. Contrarily, US Treasury yields rise, with the 2-year reaching a daily high at 1..204% but retreated to 1.189% at press time.

Mixed US macroeconomic data weighs on the greenback

The US economic docket featured the ISM Non-Manufacturing PMI for January, which came at 59.9, four-tenths higher than the 59.5 foreseen by analysts, but trailed December’s 62.3 reading. 

Anthony Nieves, chair of the ISM Services Business Committee, said that “respondents continue to be impacted by coronavirus pandemic-related supply chain issues, including capacity constraints, demand-pull inflation, logistical challenges, and labor shortages.” Concerning the impact of the Covid-19 Omicron variant, he stated that it “disrupted operations,” primarily due to the shortage of staff.  

Initial Jobless Claims for the week ending on January 29 came at 238K, better than the 245K foreseen by analysts, and lower than the previous week revised upwards, to 261K. The market mainly ignored the news, per the pair’s reaction.

That said, AUD/USD trader’s focus is on the US Nonfarm Payrolls report for January, expected at 199K. However, Wednesday’s ADP report with companies slashing 300K jobs could be a prelude to the number

AUD/USD Price Forecast: Technical outlook

The AUD/USD remains downward biased from a technical perspective. The daily moving averages (DMAs) are above the spot price, with the 50-DMA at 0.7163, the closest to the current price action. Nevertheless, recent fundamental developments and market sentiment could not be ruled out and would exert upward pressure on the pair.

So in the near term, an AUD/USD test to the confluence of the 100-DMA and a three-month-old downslope trendline around 0.7250-60 is on the cards. However, there would be some hurdles on the way up. The first resistance would be the aforementioned 50-DMA at 0.7163. A breach of it would expose 0.7200, followed by the target abovementioned.