AUD/USD extends strong bullish momentum further beyond 0.79 handle

The Australian Dollar continued to rise against its American counterpart, with the AUD/USD pair surging through the 0.7900 handle for the first time since May 2015.

After yesterday's brief pause, the pair regained traction on Tuesday and continued with its recent sharp appreciating move despite the release of minutes from the RBA's July 4 policy meeting again raised concerns over rising A$. The central bank repeated its view that a rising domestic currency would complicate economic rebalancing, albeit portrayed an upbeat economic outlook and saw a decent improvement in the world economy. 

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Adding to this, a broad based US Dollar sell-off, led by the latest news report that two Republicans senators announced their rejection of the US President Donald Trump's health care bill further collaborated to the pair's sharp upsurge to 26-month highs, around 0.7920-25 region. 

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Meanwhile, possibilities of some big stops getting triggered could also be one of the factors behind the pair's continuous upsurge of nearly 350-pips from sub-0.7600 level touched last Monday. With short-term technical indicators pointing to highly overbought conditions, it would be prudent to wait for a consolidative move or a near-term correction before initiating any fresh bullish positions. 

In absence of any major market moving economic releases from the US, the pair remains at the mercy of USD price dynamics and broader market risk sentiment. 

Technical levels to watch

A strong follow through buying interest beyond 0.7930 area has the potential to continue lifting the pair beyond 0.7955 intermediate resistance towards reclaiming the key 0.80 psychological mark. On the flip side, any pull-back from higher levels now seems to find immediate support near the 0.7900 handle, below which the corrective slide could get extended towards 0.7830 horizontal support.

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