AUD/USD holds steady near weekly tops, bulls await a move beyond 0.7400 mark

• AUD/USD attracted some dip-buying on Thursday and turned positive for the second straight day.
• The post-FOMC USD selling remained unabated and continued lending some support to the major.
• Worries about the fast-spreading Delta variant of COVID-19 acted as a headwind and capped gains.

The AUSD/USD pair bounced around 30 pips from the Asian session lows and was last seen hovering near the top end of its daily trading range, just below the 0.7400 mark.

The pair attracted some dip-buying on Thursday and is now looking to build on the overnight goodish bounce from the 0.7315 region, or one-week lows amid the prevalent US dollar selling bias. This, along with signs of stability in the equity markets, extended some support to the perceived riskier aussie and pushed the AUD/USD pair higher for the second straight day.

The FOMC announced its monetary policy decision on Wednesday and sounded optimistic, acknowledging that the economy has made progress towards the maximum employment and price stability goals. However, the Fed Chair Jerome Powell took a dovish turn at the post-meeting press conference and emphasised that they were some ways away from substantial progress on jobs.

Powell was also cautious about tapering and said that policymakers discussed some details but it will take a few more meetings to get into it. The difference in tone between the statement and Powell's remarks weighed heavily on the greenback. Apart from this, a further decline in the US Treasury bond yields dragged the USD Index to the 92.00 neighbourhood or two-week lows.

That said, concerns about the economic fallout from the fast-spreading Delta variant of the coronavirus acted as a headwind for the Australian dollar and capped gains for the AUD/USD pair. In fact, New South Wales reported 239 news cases on Wednesday, the highest in 16 months. The authorities have said they want that number near zero before lifting restrictions on July 30 target date.

Even from a technical perspective, the AUD/USD pair, so far, has been struggling to make it through the 0.7400 round figure. This further makes it prudent to wait for some strong follow-through buying before confirming that the pair has bottomed out in the near term and positioning for any meaningful appreciating move.

Market participants now look forward to the US economic docket – highlighting the releases of the Advance second-quarter US GDP print, Initial Weekly Jobless Claims and Pending Home Sales. The first estimate is expected to show that growth in the world's largest economy accelerated by a robust 8.6% annualized pace during the April-June quarter.

The data, along with the US bond yields, might influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader market risk sentiment and development surrounding the coronavirus saga to grab some short-term opportunities around the major.

Technical levels to watch