AUD/USD briefly broke below its 200-hour moving average before rebounding as risk-on flows returned to markets. The pair reclaimed its 100-day and 100-hour moving averages, putting buyers back in control with the May-high retracement level at 0.70707 as the next test.
AUD/USD is ticking higher after briefly trading below the 200-hour moving average at 0.7045 by a pip before the break failed and the pair rebounded.
Selling pressure fades into a rebound
The pair fell yesterday after its post-CPI run to new highs going back to June 5 stalled and reversed into the close. That selling carried into today's session, pushing AUD/USD below both the 100-hour moving average at 0.70598 and the 100-day moving average at 0.7055.
Sellers then drove the pair toward the 200-hour moving average at 0.7045. However, the break below that level did not hold, and buyers stepped back in.
Risk-on flows lift the Aussie
Broader risk-on flows have since supported the Australian dollar. US equities are climbing, with the Nasdaq up 1.03% and the Nasdaq 100 up 1.35%, while the S&P index trades at a new record high. At the same time, Treasury yields are sliding, with the 2-year yield down 6.7 basis points and the 10-year yield down 7.1 basis points.
That combination has fueled renewed buying in AUD/USD. The rebound has taken the price back above the 100-day moving average at 0.7055 and the 100-hour moving average at 0.70598, shifting the short-term technical picture back toward buyers.
Next test sits at 0.70707
The 100-day moving average at 0.7055 is now a close-risk level for buyers. Staying above it keeps them in play; a move back below would weaken the rebound and bring the 200-hour moving average at 0.7045 back into focus.
On the topside, the next target is the 50% retracement of the move down from the May high at 0.70707. A break above that level would open the door toward this week's swing highs, culminating with yesterday's high at 0.7091.
For now, the failed break below the 200-hour moving average has given buyers the advantage, with the challenge being to extend the move through 0.70707.
Source: InvestingLive
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