AUD/USD Price Analysis: Bulls might now aim to test 0.7235-40 confluence hurdle

• AUD/USD gained follow-through traction on Monday and climbed to a fresh multi-week top.
• Sustained move beyond the 0.7145 confluence hurdle supports prospects for further gains.
• Weakness below the 0.7100 mark could be seen as a buying opportunity and remain limited.

The AUD/USD pair prolonged its strong recovery momentum from the YTD low and kicked off the new week on a positive note amid the prevalent US dollar selling. Expectations that the Fed could pause the current rate hike cycle later this year dragged the USD Index to a fresh monthly low.

Apart from this, the ongoing risk-on rally across the global equity markets further undermined the safe-haven buck. This, along with the Reserve Bank of Australia's hawkish signal that a bigger interest rate hike is still possible in June, offered additional support to the risk-sensitive aussie.

The combination of factors assisted the AUD/USD pair to capitalize on Friday's move beyond the 0.7145 confluence hurdle. The said barrier comprised the 200-period SMA on the 4-hour chart and the 38.2% Fibonacci retracement level of the 0.7662-0.6829 fall, which should now act as a pivotal point.

Looking at the broader picture, the recent appreciating move witnessed over the past two and half weeks or so has been along an upward sloping channel. This points to a well-established short-term bullish trend and should allow the AUD/USD pair to climb further beyond the 0.7200 round figure.

The subsequent strength, however, is likely to confront resistance near the 100-day SMA, around the 0.7235-0.7245 region. The said barrier coincides with the 50% Fibo. level and is followed by the 200-day SMA, near the 0.7260 zone, which if cleared would be seen as a fresh trigger for bulls.

On the flip side, the 0.7145 confluence resistance breakpoint now seems to protect the immediate downside ahead of the 0.7100 mark. Any further decline might still be seen as a buying opportunity and remain limited near the 23.6% Fibo. level support, near the 0.7025-0.7020 region.

Some follow-through selling, leading to a subsequent break through the 0.7000 psychological mark, will shift the bias in favour of bearish traders. The AUD/USD pair could then fall to the 0.6940 area en-route the 0.6900 mark and the 0.6830-0.6825 region, or the YTD low touched earlier this month.

AUD/USD 4-hour chart

Key levels to watch