The bias appears to shift in favor of the bulls, targeting 0.7760

• AUD / USD finds support once again near 0.7710, as the DXY index retreats.
• The RSI on the 1 hour chart breaks through the midline towards the bullish zone.
• The bulls are now looking to test the 0.7750-0.7760 range.

The AUD / USD pair is extending its rally at the start of the European session on Monday, having once again found strong support near the 0.7710 region.

The Australian dollar is supported by a further decline in the US dollar against its main rivals, following weak Treasury yields. Weakening expectations for a gradual reduction in Fed bond purchases weighs on US and USD yields.

Earlier in the Asian session, AUD / USD resumed Friday’s slide after China reiterated that it remains committed to fending off financial risks by curbing rising commodity prices. Chinese iron ore futures fell about 10%, while Comex copper prices fell 0.60% on concerns over China.

From a short-term technical perspective, the pair remains exposed to more bullish risks as it has recovered the downtrend 21-hour moving average at 0.7737 on its way to recovery from lows of 0.7713.

The horizontal 50 hourly SMA at 0.7750 now remains in the sights of the bulls, above which the confluence of the 100 and 200 hourly SMAs around 0.7760 could be challenged.

The RSI is breaking through the center line to now move more firmly into positive territory, suggesting that the bias has shifted in favor of the pair’s bulls.

However, if the price does not find acceptance above the 50 SMA, then a turn towards the 21 SMA support cannot be ruled out.

Lower down, the daily low could be retested before targeting the psychological level of 0.7700.

AUD / USD 1 hour chart

AUD / USD additional levels