The AUD/USD is currently licking its wounds while printing mild gains around 0.6735-40 after bouncing off a seven-week low during early Monday’s sluggish session. This corrective move is likely due to a convergence of the 100-DMA and an upward-sloping support line from late November 2022, as well as the nearly oversold RSI (14).
However, the recovery remains elusive unless providing a daily closing beyond the 200-DMA hurdle of 0.6800. Following that, a downward-sloping resistance line from February 02, close to 0.6850 at the latest, acts as the last defence of the AUD/USD bears, a break of which could propel prices towards the 0.7000 round figure.
Should the Aussie pair buyers keep the reins past 0.7000, tops marked during the mid-February, as well as the monthly high, surrounding 0.7030 and 0.7160 in that order, could lure the upside momentum. Meanwhile, a daily closing below 0.6730 could quickly drag AUD/USD toward a late December 2022 low near 0.6630. However, lows marked during November 21 and 11, around 0.6585 and 0.6575 could challenge the bears afterward.
Overall, the trend for AUD/USD is currently limited recovery, however, this is expected to remain elusive unless a sustained break of 0.6850 is achieved. On the technical side of things, the AUD/USD is currently facing resistance from the 200-DMA, as well as a three-week-old descending trend line, while bearish MACD signals also challenge recovery moves. On the flip side, the convergence of 100-DMA, three-month-old ascending support line is restricting immediate downside.
It is clear that the AUD/USD is currently in a precarious position, with bulls and bears both looking to gain control. For the bulls to win out, they must push the pair past the 0.6850 resistance line and continue to 0.7000 and beyond. However, if the bears take control, the AUD/USD could quickly drop to 0.6630 and even 0.6585.
Ultimately, the AUD/USD is currently in a state of flux, with the outcome of the next few days likely to determine the direction of the pair over the coming weeks. With the technicals currently in a state of balance, traders should be aware of the risks associated with both long and short positions.
