Breaking: AUD/USD breaks through critical 0.8000 level, fresh three-year highs
- AUD/USD rides the reflation wave higher.
- The aussie reaches the highest since February 2018.
- The surge in commodities complex underpins the AUD.
The buying interest around the AUD/USD pair remains unabated, as the bulls take out the critical 0.8000 hurdle for the first time since February 2018.
The reflation theme gains momentum in the European session, reflected by the risk-on market mood. Expectations of a quick economic turnaround, courtesy of the US fiscal stimulus and covid vaccines rollout, continues to boost the risk appetite while weighing negatively on the safe-haven US dollar.
The broader market optimism has driven the US Treasury yields sharply higher, with the benchmark 10-year yields up nearly 3.50% at 1.437%, fresh yearly highs.
The Fed Chair Jerome Powell’s dovish comments, downplaying inflation risks and calling for accommodative monetary policy stance, sparked up the reflation trade, rendering AUD-supportive.
Further, the rally in oil and copper prices adds credence to the move higher in the resource-linked aussie. Oil sits at fresh 13-month tops above $63.50 while copper prices reach decade highs near $4.33.
AUD/USD: Technical outlook
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AUD/USD: Daily chart
The aussie’s daily chart spots a big technical breakout after the rates cleared the five-month-old rising trendline resistance at $0.7970. Although a daily closing above the latter is needed for the AUD bulls to extend the breakthrough the all-important 0.8000 level.
The path of least resistance appears to the upside for AUD/USD, although overbought conditions on the Relative Strength Index (RSI) warrant caution for the bulls. Therefore, a profit-taking slide towards 0.7900 cannot be ruled in the coming days before the uptrend resumes.
AUD/USD additional levels
Author
FXStreet Team
FXStreet
