The AUD/USD pair continued gaining traction through early NA session and built on to its gains beyond the key 0.7500 psychological mark.
Currently trading around 0.7510-15 region, the pair climbed to fresh session peak despite of a modest US Dollar recovery. Political turmoil in the US and fading expectations for additional Fed rate-hike moves in 2017, against the backdrop of recent slew of dismal US macro data, has been driving the US treasury bond yields lower and driving flows towards higher-yielding currencies – like the Aussie.
Meanwhile, the pair’s latest leg of up-move in the past hour of so could also be attributed to some short-covering, following a decisive break through the 0.7500 handle. Hence, it would prudent to wait and see if the up-move is backed by genuine buying interest or is just a stop-run.
With markets already pricing-in June Fed rate-hike action, the pair runs the risk of a sharp reversal in case of strong hawkish signals from the Fed meeting minutes, due for release on Wednesday. In the meantime, speeches from various Fed officials and the US economic docket, featuring the release of flash PMI prints, new home sales and Richmond Manufacturing Index, would be looked upon to grab some short-term trading opportunities.
Technical levels to watch
Immediate resistance is pegged at 50-day SMA near 0.7530-35 area and is closely followed by 100-day SMA hurdle near 0.7555 region. A follow through buying interest has the potential to lift the pair beyond the 0.7600 handle, level not seen since mid-April.
On the flip side, any retracement below the 0.75 handle now seems to find support near 0.7485 level, which if broken could accelerate the corrective slide towards 0.7435-30 horizontal support.