AUD/USD Price Analysis: Acceptance above 0.6700/200-day SMA favours bullish traders

• AUD/USD rises to a three-week top on Wednesday and is supported by sustained USD selling.
• Acceptance above the 200-day SMA favours bulls and supports prospects for additional gains.
• A convincing break below the 0.6600 mark is needed to negate the near-term positive outlook.

The AUD/USD pair scales higher for the second successive day on Wednesday - also marking the third day of a positive move in the previous four - and touches a nearly three-week high during the Asian session. Spot prices, however, retreat a few pips in the last hour and currently trade around the 0.6720 region, still up over 0.50% for the day.

The US Dollar (USD) selling remains unabated for the fifth straight day in the wake of speculations that the Federal Reserve (Fed) is nearing the end of its current rate-hiking cycle and turns out to be a key factor acting as a tailwind for the AUD/USD pair. Apart from this, a generally positive risk tone drags the safe-haven Greenback to a fresh two-month low and further benefits the risk-sensitive Aussie. Bulls, however, turn caution and refrain from placing aggressive bets ahead of the release of the US consumer inflation figures, due later during the early North American session.

From a technical perspective, the strong intraday positive move beyond the 200-day Simple Moving Average (SMA) hurdle and acceptance above the 0.6700 mark supports prospects for a further near-term appreciating move. Moreover, oscillators on the daily chart have just started gaining positive traction. This, along with hawkish remarks by Reserve Bank of Australia (RBA) Governor Philip Lowe, saying that some further tightening will be required to return inflation to target, suggests that the path of least resistance for the AUD/USD pair is to the upside.

Some follow-through buying beyond the 0.6740-0.6750 region will reaffirm the outlook and allow spot prices to aim back to reclaim the 0.6800 round-figure mark. The upward trajectory could get extended further and lift the AUD/USD pair towards testing the next relevant barrier near the 0.6835-0.6840 region.

On the flip side, the 0.6700 resistance breakpoint now seems to protect the immediate downside. Any further decline is more likely to attract fresh buying and remain limited near the 0.6655-0.6650 region. The latter should act as a pivotal point, which if broken might force the AUD/USD pair to slide back towards testing sub-0.6600 levels. Acceptance below the latter has the potential to drag spot prices further towards the 0.6540 intermediate support en route to the 0.6500 psychological mark and the 0.6460-0.6455 region, or the YTD low touched on May 31.

AUD/USD daily chart

Key levels to watch