AUD/USD reclaims 0.7400 as bulls prepare an assault towards 0.7500

• The Australian dollar stages a recovery and rallies more than 1%.
• Falling US Treasury yields and a weaker US dollar are a tailwind for the AUD/USD.
• Hawkish RBA minutes lifted the AUD/USD, despite an incumbent 50-bps increase by the Fed.
• AUD/USD Price Forecast: To probe the 0.7500 figure and beyond.

The Australian dollar is soaring in the North American session and reclaims the 0.7400 figure, courtesy of a weaker US dollar and a risk-on market mood, as portrayed by US equities recording gains. At the time of writing, the AUD/USD is trading at 0.7449, up 0.96% though shy of the March 7 swing high.

The market sentiment is upbeat, and in the FX space, that triggered an appetite for commodity-linked currencies. The AUD, the CAD, and the NZD rose, while the greenback remains on the back foot, down some 0.62%, sitting at 100.362, undermined by falling US Treasury yields. The 10-year benchmark note drops to 2.849%, losing nine basis points.

Meanwhile, the AUD/USD finally reflected the “hawkish” tone of the Reserve Bank of Australia (RBA) last meeting minutes. The RBA’s Board reported that it is more focused on global events, meaning higher inflation and actions of other central banks. The RBA recognized that the timing of the first-rate hike had moved forward, citing extraordinary evidence on inflation and wages.

Of late, Fed officials continue to cross wires ahead of the blackout period on April 23. Monday’s words of St. Louis Fed President James Bullard continue resounding in the financial markets, as he opened the door for a 75 bps rate hike and emphasized that Fed officials want to get to neutral (rates) expeditiously.

On Wednesday, the San Francisco Fed President Mary Daly said that the case for a 50bps rate hike in May is now complete so that the Fed can announce a reduction of its balance sheet as soon as May. Daly added that increasing rates up t0 2.5% is not abrupt or surprising and added that the consensus view about it is appropriate.

Earlier in the week, Chicago Fed President Charles Evan crossed the wires. Evans said that the US economy “will do very well even as rates rise.” He noted that he supports a “couple” of 50 bps increases, which could lift rates to the 1.25%-2.50% neutral rate.

In the geopolitics backdrop, the Ukraine-Russia conflict continues on different fronts. Once a port of 400,000, Mariupol will be seized by Russian troops, while the Kremlin said Kyiv was delaying peace talks. At the same time, Ukraine accuses Moscow of blocking discussions by refusing humanitarian cease-fires.

AUD/USD Price Forecast: Technical outlook

With the AUD/USD reclaiming the 0.7400 figure, it could exacerbate the rally towards 0.7500 and beyond. Now that the Relative Strength Index (RSI) is back in the bullish territory (53.61), the prospects of higher AUD/USD prices increased.

That said, the AUD/USD first resistance would be the mid-parallel Pitchfork’s line between the central and top-parallel lines near 0.7500. A breach of the latter would expose the confluence of October 2021 and March 28 cycle high around the 0.7430-60 area, followed by a test of 0.7600.

Key technical levels