The AUD/USD pair witnessed some selling during the early part of the European session and was last seen trading near the daily low, around the 0.7380-0.7375 region. 

The Australian dollar continued drawing support from rising bets for an early rate hike move by the Reserve Bank of Australia, boosted by Thursday's upbeat domestic jobs report. Apart from this, hopes that China will deliver additional stimulus to complement its promise to support the economy and stabilize the financial markets boosted antipodean currencies, including the aussie.

The combination of supporting factors pushed the AUD/USD pair to a near two-week high on Friday, though bulls struggled to find acceptance or build on the momentum beyond the 0.7400 mark. The lack of progress in the Russia-Ukraine ceasefire talks tempered investors' appetite for perceived riskier assets. This, in turn, benefitted the safe-haven US dollar and capped gains for the major.

we underestimated the upward momentum as it easily cracked the major resistance at 0.7365 (high of 0.7392). Further AUD strength is not ruled out but deeply overbought conditions suggest that any advance is unlikely to break the next major resistance at 0.7440 (there is another resistance at 0.7410). On the downside, a breach of 0.7330 (minor support is at 0.7350) would indicate that the current strong upward pressure has eased.

We noted the rapid build-up in momentum yesterday and we expected AUD to advance to 0.7365. We did not quiet expect AUD to move above 0.7365 so quickly (high of 0.7392 in NY). Momentum remains strong and AUD could rise towards the next major resistance at 0.7440. The strong upside pressure is intact as long as AUD does not move below 0.7300 (‘strong support’ level was at 0.7210 yesterday)

Rejection of 0.7440 Might Prove to be a Bearish Outlook

Mar 18 2022