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

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