The AUD/USD pair has witnessed a sharp rebound from its four-day low of around 0.6650, as it continues to build on its solid intraday recovery during the mid-European session. Spot prices have spiked to the 0.6760 area, which represents a nearly one-month high in the last hour. Bulls are making a fresh attempt to build on the momentum and push the currency pair beyond a technically significant 200-day Simple Moving Average (SMA).
Bullish Momentum Driving AUD/USD Pair’s Recent Movements
The recent bullish momentum driving the AUD/USD pair can be attributed to several factors. One of the key drivers is the improved risk sentiment in the market, which has led to a surge in demand for high-yielding currencies like the Australian dollar. The optimism stems from hopes of a swift economic recovery, as countries continue to roll out their vaccination programs and ease lockdown measures.
Another factor driving the currency pair’s movements is the ongoing weakness in the US dollar, which has been under pressure due to the Federal Reserve’s dovish stance. The central bank has reiterated its commitment to keeping interest rates low and maintaining its asset purchase program until the economy shows sustained improvement. This has weighed on the greenback, making it less attractive to investors.
Technical Analysis of AUD/USD Pair’s Movement
From a technical perspective, the AUD/USD pair has broken above its 200-day SMA, which is a key level of resistance. This suggests that the bulls are gaining control of the currency pair, and a further upside move could be in the cards. The next major resistance level is seen at around the 0.6800 handle, followed by the 0.6850 level.
On the downside, the 0.6700 level is likely to provide immediate support, followed by the 0.6650 area. If the pair fails to hold above these levels, it could trigger a pullback towards the 0.6600 level.
In conclusion, the AUD/USD pair has witnessed a sharp rebound from its four-day low and is currently trading near its one-month high. The bullish momentum can be attributed to the improved risk sentiment in the market, coupled with the ongoing weakness in the US dollar. From a technical perspective, the currency pair has broken above its 200-day SMA, which suggests that the bulls are in control.