AUD/USD Price Analysis: Climbs above 0.6950 as USD Index loses strength

• AUD/USD has extended its rebound move to near 0.6960 as investors’ risk appetite has improved.
• The asset has scaled above the 20-EMA, however, the 200-EMA is still above the spot price.
• The lower portion of the Rising Channel has acted as a support for the Australian Dollar.

The AUD/USD pair has recovered firmly from 0.6920 in the Asian session as the US Dollar index (DXY) has lost strength amid an easing risk-off impulse. The Aussie asset has accelerated to near 0.6960 and is expected to continue its upside momentum ahead.

Softer US Treasury yields have weighed on the US Dollar Index (DXY), which is working hard to hold itself above 103.00. Meanwhile, S&P500 futures are displaying significant gains as investors have ignored US President Joe Biden’s proposal of quadrupling taxes on corporate buybacks.

AUD/USD has rebounded firmly from the lower portion of the Rising Channel chart pattern on an hourly scale. The upper portion of the aforementioned chart pattern is placed from February 6 high at 0.6949 while the lower portion is plotted from February 6 low at 0.6855.

The Australian Dollar has pushed the asset above the 20-period Exponential Moving Average (EMA) at 0.6943 but is still below the 200-period EMA at 0.6989, which indicates that the short-term trend has turned bullish. However, the long-trend trend holds a bearish bias.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00, which favors a consolidation ahead.

A decisive break above January 23 high at 0.6962 will drive the asset towards the psychological resistance at 0.7000 followed by February 1 low around 0.7042.

In an alternative scenario, a downside break of the chart pattern below Wednesday’s low at 0.6919 will drag the asset toward February 7 low at 0.6885 and February 6 low at 0.6855.

AUD/USD hourly chart