AUD/USD seeks fresh clues to keep bounce off weekly low above 0.7700

• AUD/USD struggles to keep recovery moves from eight-day bottom.
• Market sentiment improves on upbeat US jobs data, Fed comments.
• Covid woes, vaccine jitters join tension in the Middle East to test bulls amid a light calendar.
• US Retail Sales becomes the key data to watch.

AUD/USD consolidates losses from a one-week low, following a volatile day that initially refreshed weekly bottom, taking rounds to 0.7730 at the start of Friday’s Asian session. Although challenges to easy money and an absence of fresh catalysts, coupled with Gaza tension, weighed on the Aussie pair initially on Wednesday, upbeat US Jobless Claims and the Fed policymakers’ comments testing the reflation fears recalled the bulls. It should, however, be noted that the coronavirus (COVID-19) updates have been grim of late and recently test the corrective pullback.

Bulls and bears jostle amid mixed clues…

Despite the strong US Producer Price Index (PPI) confirmed challenges for easy money, a 14-month low US Jobless Claims pleased traders. Also on the risk-positive side were the comments from the Fed policymakers who signaled the need for more sustained information to confirm the inflation pressure on the economy. At home, Fitch reiterated its support to Australia’s ‘AAA’ credit rating amid an upbeat budget.

Elsewhere, Israel-Palestine tussles escalate in Gaza whereas the BBC reports the UK Government’s ‘concern’ at speed of growth in Indian covid variant.

It’s worth mentioning that off in multiple global markets and the market’s wait for today’s US Retail Sales for April, expected 1% MoM versus 9.7% prior, seem to test the trading sentiment as well.

Amid these plays, Wall Street benchmarks bucked the three-day downtrend while the US 10-year Treasury yields dropped 4.4 basis points (bps) to 1.65% at the end of Thursday’s North American session.

Moving on, a thin presence of the local factors may keep AUD/USD rangebound, also the cautious sentiment ahead of the US Retail Sales. However, risk catalysts remain on the driver’s seat with any more support reflation chatters likely weighing on the Aussie pair.

Read: US April Retail Sales Preview: Inflation dynamics to drive USD valuation

Technical analysis

AUD/USD recovery remains doubtful unless crossing the 0.7820 hurdle. Meanwhile, multiple lows marked since March highlight 0.7695-90 as the key support.