AUD/USD: Bulls eye a break above 0.7800 amid risk-on mood

• AUD/USD nears 0.78, as DXY eases on vaccine optimism.
• Treasury yields stall the rally ahead of US NFP report.
• Aussie shrugs off fresh covid restrictions in Australia.

AUD/USD heads higher towards 0.7800, extending the 40-pips recovery from the Asian drop, as the bulls are back in control in the lead up to the critical US NFP release.

Fresh optimism prompted the US dollar bulls to take a breather, aiding the rebound in the aussie. The risk sentiment received an added boost after Pfizer’s coronavirus vaccine seems to have shown efficacy in countering the new virus variants found in the UK and South Africa.

Further, the greenback ran through offers also on the back of a retreat in the US Treasury yields across the curve. The US dollar index rebounded from almost three-year lows and briefly regained 90.00 earlier in the Asian trades, thanks to the surging Treasury yields on expectations of a higher fiscal stimulus under Joe Biden’s presidency.

Amid an upbeat market mood, the bulls shrugged off rising coronavirus concerns in Australia, in light of the new covid strain. Queensland’s State Premier Annastacia Palaszczuk announced a three-day activity restriction in Greater Brisbane.

Prime Minister Scott Morrison announced new protocols for international arrivals making it compulsory for all passengers to get tested for COVID-19 before and after their travel.

The investors pay little heed to the recent weakness in gold prices, as all eyes shift towards the US payrolls data due later today in the NA session.

AUD/USD technical levels

“The hourly chart shows the currency pair is forming a head-and-shoulders pattern with neckline support near 0.7724. Acceptance under that level would confirm bearish reversal and open the doors to 0.7628 (target as per the measured move method). On the higher side, the session high of 0.7773 is the level to watch out for, followed by Wednesday's high of 0.7820,” explains FXStreet’s Analyst Omkar Godbole.

AUD/USD additional levels