- AUD/USD recovers from a modest intraday drop and hits a near two-week high on Tuesday.
- The prevailing selling bias around the dollar continues to support the pair’s intraday rally.
- A break of the 0.6865-0.6860 confluence supports the prospects for further gains.
The AUD/USD pair has attracted some buying near the 0.6860 area on Tuesday and turned positive for the third day in a row. The pair is currently hovering near a two-week high, with the bulls expecting a sustained move beyond the 0.6900 level.
The US dollar selling continues during the first half of the European session and turns out to be a key factor acting as a tailwind for the AUD/USD pair. However, the rally lacks continuation as investors eagerly await the US CPI consumer inflation figures due out today.
From a technical point of view, the appearance of further buying near the 0.6865-0.6860 confluence break point supports the prospects for further gains. This zone comprises the upper end of a month-long descending channel and the 38.2% Fibonacci retracement of the August-September dip.
This should be a benchmark for intraday traders. Any further pullback could be seen as a buying opportunity near the low around the 0.6825 area. This, in turn, should cap any further losses for the AUD/USD pair near the 0.6800 round level.
A convincing break below this latest level will suggest that the corrective bounce has run out and will change the bias in favor of the bears. The AUD/USD pair could then drop to the intermediate support at 0.6730 on its way to the 0.6700 round level and the yearly low around the 0.6680 region.
On the other hand, sustained strength beyond the 0.6900 level is likely to face stiff resistance near the 100-day SMA, currently at the 0.6960 zone. Some continuation buying should pave the way for further appreciation and allow the AUD/USD pair to reclaim the psychological 0.7000 level.
AUD/USD 4 hour chart
AUD/USD additional levels
Source: Fx Street
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