The AUD/USD pair held onto its intraday gains during the early European session, trading around the 0.6685 mark, up over 0.25% for the day.
The US Dollar (USD) has slipped to its lowest level since January, driven by growing expectations that the Federal Reserve (Fed) may begin cutting interest rates in September. This weakening of the USD, combined with the Reserve Bank of Australia‘s (RBA) hawkish stance, has provided a favorable tailwind for the AUD/USD pair, marking its third consecutive day of gains.
Technical indicators on the daily chart remain comfortably in positive territory, with no signs of entering the overbought zone. The recent breakout above the 200-day Simple Moving Average (SMA) further indicates that the path of least resistance for the AUD/USD pair is upward.
However, bulls may need to see sustained buying beyond the 0.6700 level to confirm a continued recovery from the year-to-date low near the 0.6520-0.6515 area, reached earlier this month. Should this momentum continue, the pair could target the intermediate resistance at 0.6745, followed by a potential move towards the 0.6800 mark.
On the downside, immediate support is expected around the 0.6650 level, near the Asian session low, followed by the 0.6600 mark, which coincides with the 200-day SMA resistance-turned-support. A break below this level could trigger aggressive technical selling, potentially leading to deeper losses.
The next significant support lies near the 0.6565 area, with further selling pressure possibly extending the decline towards the 0.6520-0.6510 region. A sustained drop below the 0.6500 psychological mark would suggest that the recent upward momentum has stalled, shifting the bias towards bearish traders.
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