AUD/USD Price Analysis: Approaches 0.6700 as USD Index extends downside

The AUD/USD pair has extended its recovery and is marching toward the round-level resistance of 0.6700 in the European session. The Aussie asset has resumed its upside journey as the US Dollar Index (DXY) has extended its downside.

On a broader note, the USD Index is expected to remain sideways as investors are awaiting the release of the United States Consumer Price Index (CPI) for further action.

The Australian Dollar has gained strength as the street is anticipating that the Reserve Bank of Australia (RBA) will keep raising interest rates further despite deteriorating Australian economic prospects. A poll from Reuters showed that the RBA would raise its Official Cash Rate (OCR) further by 25 basis points (bps) to 4.35%.

AUD/USD witnessed responsive buying despite delivering a breakdown of the consolidation formed in a range of 0.6563-0.6808 on a daily scale. Lack of follow-up selling in the Aussie asset after a consolidation breakdown triggered a solid recovery. A responsive buying move indicates that investors considered the asset a value bet.

The Aussie asset has climbed above the 20-period Exponential Moving Average (EMA) at 0.6607, which indicates that the short-term trend has turned bullish.

Meanwhile, the Relative Strength Index (RSI) (14) has rebounded into the 40.00-60.00 range from the bearish range of 20.00-40.00, which indicates that the downside momentum has receded.

Should the Aussie asset breaks above June 07 high at 0.6718, the Australian Dollar bulls will drive the asset toward April 18 high at 0.6748 followed by May 10 high at 0.6818.

On the flip side, if the Aussie asset breaks below June 01 low at 0.6484, US Dollar bulls would drag the asset to 01 November 2022 high around 0.6464 followed by the round-level support at 0.6400.

AUD/USD daily chart