- AUD/USD edged higher for the second successive day on Wednesday amid sustained USD selling.
- The uptick lacked bullish conviction and remained capped near the YTD top set earlier this month.
- Bulls now await sustained breakthrough an ascending channel extending from sub-0.7000 levels.
The AUD/USD pair built on the previous day's goodish bounce from the vicinity of mid-0.7400s and edged higher for the second successive day on Wednesday. The pair held on to its modest intraday gains through the early North American session and was last seen trading around the 0.7520 region, just a few pips below the YTD high touched earlier this week.
Looking at the broader picture, the AUD/USD pair has been oscillating in a familiar trading band over the past one week or so. Given the recent strong recovery of over 500 pips from sub-0.7000 levels, this might still be categorized as a bullish consolidation phase. Moreover, the formation of an upward sloping trend channel adds credence to the constructive setup.
The upside, however, remains capped near the 0.7555 region, which marks the October 2021 swing high. The said area coincides with the top end of the aforementioned channel extending from the YTD low set in January and should act as a pivotal point. Sustained strength beyond will be seen as a fresh trigger for bullish traders and pave the way for additional near-term gains.
The AUD/USD pair might then accelerate the momentum and aim to reclaim the 0.7600 round-figure mark for the first time since June 2021. That said, technical indicators on the daily chart have moved on the verge of breaking into the overbought territory. This makes it prudent to wait for further near-term consolidation or modest pullback before placing aggressive bullish bets.
In the meantime, weakness back below the 0.7500 mark might continue to find decent support near the 0.7455-0.7450 region. A convincing below might prompt some long-unwinding trade and make the AUD/USD pair vulnerable to accelerate the corrective slide towards the 0.7400 mark. The downfall could get extended towards the very important 200-day SMA, around the 0.7300 round figure.
AUD/USD daily chart
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Technical levels to watch
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