AUD/USD flirting with lows heading into key US jobs report

The AUD/USD pair remained under some selling pressure on Friday and extended its retracement from Thursday's strong up-surge to 0.7700 neighborhood.

Currently trading around 0.7640-45 band, the pair extended its corrective slide triggered by today's dismal Caixin Manufacturing PMI as pre-NFP repositioning trade continues to prompt traders to unwind some of their bearish USD bets. A modest recovery in the US treasury bond yields has also been supportive of the broad based US Dollar recovery from Thursday's 11-week lows and collaborating to the pair's offered tone on Friday. 

Meanwhile, negative sentiment surrounding commodity space, especially Copper, is also denting demand for commodity-linked currencies - like the Aussie. 

Friday's downslide, however, might still be categorized as corrective and could be attributed to some profit-taking following yesterday's rally to the highest level since Nov. 10, in wake of record high Australian trade-surplus data.

Investors on Friday keenly await the release of monthly jobs report from the US, which would provide fresh clues over the possibilities and timing of next Fed rate-hike action, and eventually determine the pair's next leg of directional move.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet notes, "On the daily chart, we see inverse head and shoulder breakout. The ‘measured move’ technique suggests potential for a rally to 0.81 handle. However, that is a tall order … at least in the short-run, given that the 4-hour RSI is overbought, while the daily RSI is almost overbought. Thus, a short-term loss of momentum and a pull back to 0.7606 (5-DMA) cannot be ruled out. Strong US wage growth figures may yield a bigger retracement, although bulls have little reason to fear as long as the spot stays above 0.7511."