• AUD/USD consolidated its recent gains and remained confined in a range below the monthly high.
  • A softer tone around the equity markets acted as a headwind for the perceived riskier aussie.
  • The downside remains cushioned amid receding Omicron fears and thin end-of-year liquidity.

The AUD/USD pair surrendered its modest intraday gains and was last seen hovering near the lower end of the daily trading range, around mid-0.7200s.

The pair struggled to capitalize on its recent upward trajectory and oscillated in a narrow trading band, below the 100-day SMA for the second successive day on Friday. A cautious market mood – as depicted by a softer tone around the equity markets – acted as a headwind for the perceived riskier aussie.

That said, the recent optimism over signs that the Omicron variant might be less severe than feared and is unlikely to derail the economic recovery continued underpinning the risk sentiment. This, along with subdued US dollar price action, should help limit the downside for the AUD/USD pair amid thin end-of-year liquidity.

In the absence of any major market-moving economic releases, the broader market risk sentiment would drive the USD demand and allow traders to grab some short-term opportunities on New Year’s Eve. Nevertheless, the AUD/USD pair remains on track to end with modest gains for the second successive week.

The market focus now shifts to important US macro data, including the closely-watched US monthly jobs report (NFP), scheduled at the beginning of a new month. Apart from this, developments surrounding the coronavirus would assist traders to determine the next leg of a directional move for the AUD/USD pair.

Technical levels to watch

This article was originally published by Fxstreet.com.Read the original article here.

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