AUD/USD consolidates recent gains below 0.7200 as yields stabilize on coronavirus fears

• AUD/USD keeps pullback from three-week high, bounces off intraday low.
• Australia’s Queensland widens mask mandate, UK reports all-time high daily covid infections.
• US Senate rejects a Democratic proposal from the BBB bill, President Biden says he is optimistic over passage.
• UK-Australia signals FTA deal, China dislikes US move on entities over Xinjiang-related issues.

AUD/USD struggles to keep the previous two-day advances as coronavirus woes challenge the bulls around 0.7170, down 0.07% intraday, during Friday’s Asian session.

In addition to the fears emanating from South Africa linked covid variant, the US-China tussles and negative news over the US President Joe Biden’s Build Back Better (BBB) plan, not to forget geopolitical tension with Iran, also weigh on the risk barometer pair.

Although Australia marks the covid vaccination milestone of 80%, the recent jump in virus variant pushes authorities to introduce tougher activity restrictions in Queensland. That said, the all-time high in coronavirus daily cases from the New South Wales (NSW) pushes the national count to 3,743 at the latest, per data from ABC News.

Elsewhere, the UK, unfortunately, reports the second consecutive day with all-time high daily covid infections, recently up by 88,376. It’s worth noting that US President Biden earlier mentioned that Omicron is going to start spreading more rapidly. On the contrary, French President Emmanuel Macron said, “I will make COVID-19 decisions based on hospitalizations.”

Also challenging the AUD/USD buyers is the recent news from the US Senate that rejected a Democratic proposal over immigration, which in turn stopped the President’s BBB aid package. Even so, Biden sounds optimistic to get the much-awaited stimulus passed soon. Additionally weighing the Aussie pair were comments from the Chinese Ambassador who conveyed dislike for the US actions against Chinese entities over Xinjiang-related issues.

Alternatively, Britain and Canberra recently signed a Free Trade Agreement (FTA) deal. “It is described as the first post-Brexit deal negotiated from scratch and not "rolled over" from trade terms that the UK enjoyed while in the EU. The government estimated it would unlock £10.4bn of additional trade while ending tariffs on all UK exports,” said the BBC.

It’s worth noting that a surprise positive of the Aussie employment report and global central bankers’ positive play favored the AUD/USD buyers of late.

Amid these plays, the US 10-year Treasury yields lick the wounds near 1.42% whereas the S&P 500 Futures fails to ignore Wall Street losses.

Looking forward, a light calendar will keep the risk catalysts on the driver’s seat and hence COVID-19 woes may challenge the bulls.

Technical analysis

A failure to provide daily closing beyond two-week-old resistance-turned-support, near 0.7200, directs AUD/USD sellers towards 21-DMA near 0.7150. Even so, a clear upside break of the monthly ascending trend line and 38.2% Fibonacci retracement (Fibo.) of October-December downside favor the bulls.