AUD / USD rises to new four-month highs above 0.7500

• AUD / USD shoots to fresh four-month highs above 0.7500.
• The risk appetite in the market drives risk-sensitive currencies like AUD and hurts safe-havens like USD and JPY.
• High yields on Australian 10-year bonds propel the AUD, despite signals from the RBA not to raise rates until 2024.

The AUD / USD hits fresh four-month highs at time of writing, rising 0.54% on the day and trading at 0.7514 during the American session on Wednesday. The positive sentiment around the financial markets, Despite the impending announcement by the Federal Reserve that the reduction in the bond company and higher energy prices.

Major European and US stock indices soar, while the CBOE Volatility Index (VIX) fell to 15.7, close to the lowest level since February 2020. Meanwhile, the US dollar DXY index, which measures the performance of the USD against a basket of six major currencies, falls 0.13% and it stands at 93.66, even as the 10-year US Treasury yield rises 1 basis point and is currently at 1.635%.

The pair AUD / USD is up more than 1% since the beginning of the week, in line with investors’ risk appetite. Although the Reserve Bank of Australia (RBA) noted that a rate hike would not come until 2024, the market expectations are different. On Tuesday, New Zealand’s CPI reading hit a 10-year high, causing the New Zealand 10-year bond yield to jump to 2.40%, while the Australian 10-year coupon rose to 1.86%.

Also, the positive news on the COVID-19 front is that Melbourne welcomes vaccinated Sydney residents without quarantine, so that as the country eases the blockages, the economic recovery would not be jeopardized.

On the macroeconomic front, the Australian economic calendar is empty. Looking at the US economic calendar, the change in EIA crude stocks for the week ending October 15 declined by 0.4 million barrels, triggering a slight jump in WTI prices. Additionally, Federal Reserve Vice Chairman Randal Quarles will deliver a new speech and it could generate new momentum for AUD / USD investors.

AUD / USD Technical perspectives

The AUD / USD pair broke the resistance at 0.7477, approaching the 200-day moving average at 0.7563. However, as the RSI is at 72 overbought levels, the AUD / USD could consolidate before resuming the uptrend.

As the pair heads higher, the first resistance would be the 200-day SMA at 0.7563. A breakout of this level could open the door to a test of the confluence of a descending trend line along with the June 25 high around the zone. 0.7616, followed by the June 11 high in 0.7775.

On the other hand, if it closes below 0.7500 again, AUD / USD investors will find 0.7477 as your first support. A breakout of that level could push the pair towards the 100-day SMA at 0.7404, followed immediately by the October 13 low at 0.7323.