AUD/USD struggling for direction, eyeing ADP report for fresh impetus

Having erased upbeat retail sales data-led tepid recovery gains, the AUD/USD pair remained stuck in a narrow trading band ahead of US economic data. 

Currently trading around 0.7615-20 band, the pair has managed to defend 50-day SMA support near 0.7600 handle for the time being and is waiting for fresh impetus from US economic releases, especially ADP report, which if beats expectations would raise expectations of a stronger headline NFP print on Friday and eventually drive the greenback higher.

Earlier during Asian session, the pair got a boost from better-than-expected Australian monthly retail sales but failed to build on to its recovery momentum amid cautious investor sentiment on news reports that ECB might consider to trim its bond-purchase program before the scheduled conclusion in March 2017.

The US economic docket on Wednesday also features the release of ISM non-manufacturing PMI, trade balance data and factory orders, which will be looked upon for short-term momentum play.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet, notes, "Pair’s retreat from yesterday’s high of 0.7691 coupled with the bearish 5-DMA and 10-DMA crossover suggests prices are more likely to complete head and shoulder formation by moving lower to the neckline level around 0.7577 levels, which if breached would open doors for a deeper retracement to 0.75-0.7470 levels."

"On the higher side, only a daily close above 0.77 would suggest continuation of the rally from 0.7442 (Sep 13 low)."