AUD/USD Forecast: Further gains appear likely near term

• AUD/USD flirted with the 100-day SMA near 0.6580.
• The Greenback remained on the back foot and bolstered the pair.
• Extra gains in the commodity space also sustained the sharp uptick.

Monday witnessed renewed selling pressure on the US Dollar (USD), prompting AUD/USD to maintain its upward momentum for the second week in a row and briefly poke with the provisional 100-day SMA in the 0.6580-0.6585 band, or three-week tops.

As for the Greenback, sellers reappeared in the market following the suspected intervention by the Japanese MoF during early trade, which dragged USD/JPY sharply lower following multi-decade lows of the yen past the 160.00 mark vs. the US Dollar.

Simultaneously, the extra gains of the Australian dollar were supported by further improvements in the commodity space, with copper prices advancing to levels last seen in March 2022 and iron ore regaining the $110.00 zone and beyond for the first time since late March.

In terms of monetary policy, investors continue to anticipate a rate cut by the Reserve Bank of Australia (RBA) later this year, particularly after inflation figures released last week exceeded expectations. Market sentiment now suggests a 90% probability of a 25 bps rate cut in 2024, compared to the approximately 50 bps of easing earlier this month.

Furthermore, both the RBA and the Fed are anticipated to commence their easing cycles later than most of their G10 counterparts.

Given the Fed's determined stance on tightening monetary policies and the potential for the RBA to initiate an easing cycle later this year, the likelihood of sustained AUD/USD gains is considered limited for the time being.

Moreover, recent Chinese economic data has not convincingly signaled a durable recovery, which is crucial for supporting a substantial rebound in the Australian dollar.

AUD/USD daily chart

AUD/USD short-term technical outlook

Extra gains may see AUD/USD revisit the April peak of 0.6644, followed by the March high of 0.6667 (March 8) and the December 2023 top of 0.6871. Further north, the July 2023 peak of 0.6894 (July 14) comes ahead of the June 2023 high of 0.6899 (June 16) and the key 0.7000 mark.

Meanwhile, if sellers regain control, AUD/USD can retest its 2024 bottom of 0.6362 (April 19), prior to the 2023 low of 0.6270 (October 26) and the round milestone of 0.6200.

Looking at the larger picture, a sustained break above the crucial 200-day SMA would likely result in more gains.

On the 4-hour chart, the pair seems to have met some resistance around 0.6585. Further up comes 0.6644 and 0.6667. On the downside, the 200-SMA at 0.6523 comes first seconded by 0.6485 and the 55-SMA at 0.6471. In addition, the RSI rebounded to around 67.