The AUD/USD pair gained strong positive traction on the last day of the week and moved away from a nearly three-week low, around the 0.6600 round-figure mark touched on Friday. The pair stick to its intraday gains through the early North American session and is currently placed around the 0.6655-0.6660 region, just a few pips below the daily high. 

The US Dollar (USD) pulls back from its highest level since March 20 and turns out to be a key factor lending support to the AUD/USD pair. A generally positive tone around the equity markets prompts some profit-taking around the safe-haven buck and benefits the risk-sensitive Aussie. The downside for the USD, however, seems limited amid growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer and the latest optimism over the potential lifting of the US debt ceiling.

Adding strength to the corrective bounce could be the below-50 levels of the RSI (14) line.

However, a clear upside break of a seven-day-long descending resistance line, around 0.6635 by the press time, becomes necessary to recall the AUD/USD buyers.

Even so, the weekly high of around 0.6710 and convergence of the 100-DMA and 38.2% Fibonacci retracement of the pair’s run-up from October 2022 to February 2023, near 0.6785, can challenge the AUD/USD bulls.

Alternatively, a daily closing below the stated channel’s bottom line, close to the 0.6600 round figure, could quickly fetch the Aussie bears to the 61.8% Fibonacci retracement level of near 0.6550.

Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside and any subsequent move up might get sold into.

Short Term Buying on AUDUSD

May 21 2023