- Risk appetite weighs on the safe-haven USD and helps AUD / USD regain traction.
- The setup looks tilted in favor of the bulls and supports the prospects for additional earnings.
AUD / USD recovered positive traction on Thursday and reversed the modest losses of the previous day. The underlying bullish sentiment has weighed on demand for the safe haven US dollar and has been seen as a key factor benefiting the higher perceived risk Australian dollar.
From a technical perspective, the previous day’s pullback from the two-week highs stopped near the break point of resistance from a one-month downtrend line, near the 0.7715 region. The emergence of some buying near resistance turned support favors the bulls.
The constructive outlook is reinforced by the bullish technical indicators on the intraday and daily charts. With that being said, the bulls may need to wait for some subsequent purchases beyond the highs of the previous day, around the 0.7755 region, before opening new positions.
Above the aforementioned hurdle, the AUD / USD appears poised to build on its recent bullish move and aim to regain the round 0.7800 level. Momentum could finally push the pair towards multi-year highs, around the 0.7820 region touched on January 6.
On the other hand, the 0.7715 region could continue to act as immediate support, closely followed by the 0.7700 level. A convincing break below this region could generate some technical selling and accelerate the slide towards the horizontal support at 0.7660.
Some continuation weakness will negate the short-term positive bias and make AUD / USD vulnerable to test the round 0.7600 level. The decline could extend further towards challenging the monthly lows, around the 0.7565 region.
AUD / USD 4-hour chart
AUD / USD technical levels
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