- AUD/USD gained strong positive traction for the second consecutive session on Wednesday.
- The emergence of fresh selling around the USD was seen fueling the ongoing strong move up.
- RSI on the daily chart is flashing overbought conditions and warrants some caution for bulls.
The AUD/USD pair added to the previous day’s strong positive move and continued scaling higher for the second consecutive session on Wednesday. The momentum pushed the pair to fresh 33-month tops, with bulls now eyeing a move beyond the 0.7800 mark.
Increasing bets for a Democrat-led Senate and expectations for additional fiscal measures prompted some fresh selling around the US dollar. This, in turn, was seen as a key factor that provided a goodish lift to the AUD/USD pair and remained supportive.
Meanwhile, RSI on the daily chart is already flashing overbought conditions. This, along with a cautious mood around the equity markets, makes it prudent to wait for some near-term consolidation or a modest pullback before placing fresh bullish bets.
That said, the near-term bias remains tilted firmly in favour of bullish traders. Hence, any corrective slide might still be seen as a buying opportunity and remain limited near the 0.7740-35 horizontal resistance breakpoint, now turned support.
Any subsequent weakness might prompt some profit-taking and turn the pair vulnerable to break below the 0.7700 mark. The corrective slide could further get extended and drag the AUD/USD pair back towards weekly swing lows, around the 0.7640 region.
On the flip side, sustained move beyond the 0.7800 mark has the potential to lift the AUD/USD pair further towards the 0.7845-50 region. Bulls might then aim to reclaim the 0.7900 mark and challenge March 2018 swing highs, around the 0.7915 area.
AUD/USD 1-hourly chart
Credit: FX Street