- AUD/USD staged a solid rebound on Monday and was supported by modest USD weakness.
- Any meaningful recovery still seems elusive as the focus remains on the RBA on Tuesday.
- Bears might now wait for some follow-through selling below the 0.6970-0.6965 swing low.
The AUD/USD pair gained strong positive traction on Monday and for now, seems to have stalled its recent decline to the lowest level since July 2020. The pair maintained its bid tone through the early North American session and was last seen trading near the daily high, just above mid-0.7000s.
Bulls are now looking to build on the momentum further beyond the 23.6% Fibonacci retracement level of the 0.7315-0.6967 downfall amid modest US dollar pullback from a one-and-half-year high. Apart from this, the uptick could also be attributed to some repositioning trade ahead of the RBA on Tuesday.
From a technical perspective, any subsequent move up is likely to confront stiff resistance near the 0.7090 strong horizontal support breakpoint. This should act as a key pivotal point for traders, which if cleared decisively will suggest that the AUD/USD pair has bottomed out in the near term.
Some follow-through buying above the 0.7100 mark, which coincides with the 38.2% Fibo. level, will reaffirm the positive bias and pave the way for additional gains. The AUD/USD pair could then accelerate the move towards testing the 50% Fibo. level, around the 0.7140-0.7145 region.
On the flip side, a fresh leg down might now find decent support near the key 0.7000 psychological mark ahead of last week's swing low, around the 0.6970-0.6965 region. A convincing break below will be seen as a fresh trigger for bearish traders and make the AUD/USD pair vulnerable.
The downward trajectory could then get extended towards the next relevant support near mid-0.6800s before the AUD/USD pair eventually drops to the 0.6800 mark for the first time since June 2020.
AUD/USD 4-hour chart
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Levels to watch
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