AUD/USD Pair Climbs Higher, Touches Three-Week High on Persistent USD Selling

The AUD/USD pair continues its upward trajectory, reaching a nearly three-week high during the Asian session on Wednesday. Despite a slight retracement in spot prices, the pair remains up over 0.50% for the day, as the selling pressure on the US Dollar (USD) persists for the fifth consecutive day. Speculations of the Federal Reserve (Fed) nearing the end of its rate-hiking cycle contribute to the tailwind for the AUD/USD pair.

Additionally, a positive risk sentiment in the market pushes the USD to a fresh two-month low, benefiting the risk-sensitive Australian Dollar (AUD). However, traders exercise caution ahead of the release of US consumer inflation figures later in the early North American session.

From a technical standpoint, the strong upward move above the 200-day Simple Moving Average (SMA) hurdle and the breach of the 0.6700 mark support the potential for further appreciation in the near term for the AUD/USD pair. Furthermore, oscillators on the daily chart are showing positive momentum, and Reserve Bank of Australia (RBA) Governor Philip Lowe’s hawkish remarks indicate the need for further tightening to meet inflation targets, favoring an upside path for the pair.

Confirmation of the bullish outlook would come with continued buying beyond the 0.6740-0.6750 region, setting the stage for a retest of the 0.6800 level. Further upward momentum could potentially drive the AUD/USD pair towards testing the next significant resistance near 0.6835-0.6840.

On the downside, the 0.6700 level acts as immediate resistance, with any further decline likely to attract fresh buying interest and find support around the 0.6655-0.6650 region. This range is expected to act as a pivotal point, and a break below it may lead to a slide towards sub-0.6600 levels. If the pair accepts below this range, it could target the 0.6540 intermediate support, followed by the psychological level at 0.6500 and the YTD low at 0.6460-0.6455, reached on May 31.