The AUD/USD pair attracts some sellers following an early uptick to the 0.7120 area on Monday and remains on the defensive through the early European session on Monday. Spot prices drop to a three-day low, around the 0.7075 region in the last hour, though any meaningful downside still seems elusive.

From a technical perspective, last week's move beyond the 61.8% Fibonacci retracement level of the April-October 2022 downfall comes on the back of the recent breakout through the very important 200-day SMA. Moreover, the recent move up from the October 2022 swing low has been along an upward-sloping channel, which points to a well-established bullish trend. This, in turn, supports prospects for a further near-term appreciating move.

Hence, any meaningful corrective slide below the 0.7065-0.7060 immediate support could be seen as a buying opportunity and remain limited near the 0.7000 psychological mark. A convincing break below the latter might prompt some technical selling and drag the AUD/USD pair back towards the 0.6900 mark, coinciding with the 50% Fibo. level. This is closely followed by the lower boundary of the ascending channel, currently around the 0.6880 region, which if broken might shift the near-term bias in favour of bearish traders.

On the flip side, the daily swing high, around the 0.7120 area might act as an immediate resistance ahead of the multi-month peak, around the 0.7140-0.7145 zone. A sustained strength beyond has the potential to lift the AUD/USD pair further and allow bulls to reclaim the 0.7200 mark for the first time since June 2022. The momentum could get extended further towards the next relevant hurdle near the 0.7265 region en route to the 0.7300 round figure.

Hawkish positions to be placed after the completion of correction

Jan 30 2023