AUD/USD Price Analysis: Corrects from multi-month peak, bullish potential intact

AUD/USD meets with a fresh supply and snaps a two-day winning streak to a multi-month top.
A goodish USD recovery and a softer risk tone turn out to be key factors weighing on the Aussie.
The technical setup favours bulls and supports prospects for the emergence of some dip-buying.

Haresh Menghani FXStreet

The AUD/USD pair comes under some selling pressure on Tuesday and moves further away from its highest level since late August, around the 0.6945 area touched the previous day. Spot prices drop to a fresh daily low, around the 0.6860 region during the early North American session and for now, seem to have snapped a two-day winning streak.

A combination of factors assists the US Dollar to stage a goodish rebound from a seven-month low set on Monday, which, in turn, is seen weighing on the AUD/USD pair. A goodish pickup in the US Treasury bond yields, amid some repositioning trade ahead of Fed Chair Jerome Powell's speech, acts as a tailwind for the buck. Apart from this, a generally weaker tone around the equity markets further benefits the greenback's relative safe-haven status and contributes to driving flows away from the risk-sensitive Aussie.

From a technical perspective, the overnight positive move validated the post-NFP breakout through the 0.6890-0.6900 supply zone and the very important 200-day SMA. Adding to this, positive oscillators on the daily chart support prospects for the emergence of some dip-buying around the AUD/USD pair. Hence, any subsequent pullback is more likely to find decent support near the 0.6840 region (200 DMA). That said, a convincing break below might prompt some technical selling and set the stage for deeper losses.

The AUD/USD pair could then accelerate the accelerate the fall towards the 0.6800 mark. The latter should act as a strong base for the major, which if broken decisively will negate the near-term positive outlook and shift the bias in favour of bearish traders. The subsequent fall has the potential to drag spot prices towards the next relevant support near the 0.6725-0.6720 area en route to the 0.6700 round figure.

On the flip side, the 0.6900-0.6910 area should now act as an immediate strong hurdle ahead of the overnight swing high, around the 0.6945 region. Some follow-through buying should allow the AUD/USD pair to aim back to reclaim the 0.7000 psychological mark. The positive momentum could get extended further towards an intermediate resistance near the 0.7045-0.7050 zone en route to the 0.7100 round-figure mark.

AUD/USD daily chart

Key levels to watch

AUD/USD

Overview
Today last price	0.6867
Today Daily Change	-0.0045
Today Daily Change %	-0.65
Today daily open	0.6912

Trends
Daily SMA20	0.6763
Daily SMA50	0.6694
Daily SMA100	0.6635
Daily SMA200	0.6843

Levels
Previous Daily High	0.695
Previous Daily Low	0.6875
Previous Weekly High	0.6887
Previous Weekly Low	0.6688
Previous Monthly High	0.6893
Previous Monthly Low	0.6629
Daily Fibonacci 38.2%	0.6921
Daily Fibonacci 61.8%	0.6904
Daily Pivot Point S1	0.6875
Daily Pivot Point S2	0.6838
Daily Pivot Point S3	0.68
Daily Pivot Point R1	0.695
Daily Pivot Point R2	0.6987
Daily Pivot Point R3	0.7025

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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