AUD/USD Forecast: Extra gains appear in the pipeline

Another irresolute session in the US Dollar (USD) helped to sustain the robust recovery in AUD/USD, prompting the pair to extend further its recent breakout of the 0.6600 yardstick and advance to the vicinity of 0.6650.

Simultaneously, the Australian dollar's additional strength coincided with the ongoing surge in copper prices, reaching the $840.00 region, and the marked bounce in iron ore prices, which regained the $100.00 mark and above per tonne.

Furthermore, positive results from the Chinese manufacturing sector also contributed to the AUD's monthly resurgence, alongside ongoing speculation about potential stimulus measures from both the government and the PBoC. Continued improvements in economic indicators are crucial for bolstering the Aussie dollar and potentially initiating a more sustainable uptrend in AUD/USD.

In terms of the Reserve Bank of Australia (RBA), the recent publication of its March meeting Minutes confirmed the bank's decision to refrain from considering tightening monetary policy. RBA cash rate futures still suggest an anticipation of just under 50 bps of policy rate cuts in 2024, with the first rate cut seen in November.

It's noteworthy that the RBA is one of the final G10 central banks expected to consider interest rate adjustments this year.

Given the differing timelines for monetary policy adjustments between the RBA and the Fed, the Australian dollar may gain momentum later in the year, potentially leading to further strengthening in AUD/USD. If the pair surpasses the December 2023 peak of 0.6871, it could target a significant level of 0.7000 in the near term.

AUD/USD daily chart

AUD/USD short-term technical outlook

Further upside momentum in AUD/USD is expected to challenge its March high of 0.6667 (March 8) before reaching its December 2023 top of 0.6871. Further north comes the July peak of 0.6894 (July 14) and the June high of 0.6899 (June 16), all prior to the key 0.7000 mark.

If sellers regain control, the pair could initially drop to the key 200-day SMA at 0.6543 ahead of the April low of 0.6480 (April 1), which is closely followed by the March low of 0.6477 (March 5), and the 2024 low of 0.6442 (February 13). Breaking below this level may lead to a test of the 2023 bottom of 0.6270 (October 26), before the round level of 0.6200.

Looking at the big picture, the pair is expected to continue its bullish trend if it successfully surpasses the key 200-day SMA.

On the 4-hour chart, the pair's constructive bias appears to be intact for the time being. The initial resistance is at 0.6644 ahead of 0.6667. On the other hand, new losses may cause the pair to retest the 200-SMA of 0.6553 seconded by 0.6549 and finally 0.6480. Furthermore, the MACD remained in the positive zone, and the RSI dropped below 65.