AUD/USD Forecast: Bulls defend 0.7100, aim for further gains

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.7101

Temporal optimism boosted equities, which in turn, provided support to AUD/USD.
The preliminary estimates of the S&P Global PMIs for May coming up next.
AUD/USD resumed its gains and looks poised to extend the rally.

The AUD/USD pair traded as high as 0.7126 on Monday, holding above the 0.7100 ahead of the Asian opening. The AUD resumed its advance as the market mood was quite positive at the beginning of the week, with most global indexes posting gains. Inflation and economic growth have been under scrutiny and are the main cause of risk-aversion, and any sign of policymakers or politicians working on the matter tends to boost sentiment.

On Monday, one of the responsible was US President Joe Biden, who said to be studying cutting tariffs on Chinese imports, which could save up to $80 billion in taxes to the country. Data wise, Australia did not publish relevant macroeconomic data at the beginning of the week, but the country will release the preliminary S&P Global Manufacturing PMIs for May.

AUD/USD short-term technical outlook

The daily chart for AUD/USD hints at a bullish continuation. The pair has finally broken above its 20 SMA, which maintains its bearish slope, while technical indicators are posting modest advances within neutral levels. Furthermore, the pair is trading stable around the 61.8% retracement of its latest daily slide at 0.7100.

The 4-hour chart shows that the pair is neutral-to-bullish. AUD/USD is developing above its 20 and 100 SMAs, with the shorter one advancing above the longer one. The 200 SMA, however, keeps heading lower above the current level. Technical indicators, in the meantime, remain well above their midlines, with the Momentum retreating but the RSI stable at around 62. The risk is skewed to the upside, although a break through 0.7130 is required to confirm another leg north.

Support levels: 0.7090 0.7045 0.7000

Resistance levels: 0.7130 0.7175 0.7210

View Live Chart for the AUD/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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