- The risk-on mood undermined the safe-haven USD and assisted AUD/USD to regain traction.
- The set-up seems tilted in favour of bullish traders and supports prospects for additional gains.
The AUD/USD pair regained positive traction on Thursday and reversed the previous day’s modest losses. The underlying bullish sentiment undermined demand for the safe-haven USD and was seen as a key factor that benefitted the perceived riskier aussie.
From a technical perspective, the overnight pullback from two-week tops stalled near a one-month-old descending trend-line resistance breakpoint, near the 0.7715 region. The emergence of some dip-buying near the resistance-turned-support favours bullish traders.
The constructive outlook is reinforced by bullish technical indicators on intraday/daily charts. That said, bulls might still need to wait for some follow-through buying beyond the overnight swing highs, around the 0.7755 region, before placing fresh bets.
Above the mentioned hurdle, the AUD/USD pair seems all set to build on its recent appreciating move and aim back to reclaim the 0.7800 mark. The momentum could eventually push the pair back towards multi-year tops, around the 0.7820 region touched on January 6.
On the flip side, the 0.7715 region might continue to act as immediate support and is closely followed by the 0.7700 mark. A convincing break below the latter might prompt some technical selling and accelerate the slide further towards the 0.7660 horizontal support.
Some follow-through weakness will negate the near-term positive bias and turn the AUD/USD pair vulnerable to test the 0.7600 round-figure mark. The downfall could further get extended back towards challenging monthly swing lows, around the 0.7565 region.
AUD/USD 4-hourly chart
Credit: FX Street