AUD/USD Price Analysis: Consolidates below mid-0.7200s, not out of the woods yet

• AUD/USD gained traction for the second straight day, albeit struggled to capitalize on the move.
• Elevated US bond yields helped revive the USD demand and acted as a headwind for the major.
• The formation of a bearish flag on the daily chart also warrants some caution for bullish traders.

The AUD/USD pair built on the previous day's rebound from an over one-month-old ascending channel support and gained traction for the second successive day on Thursday.

The upbeat Australian employment details, along with signs of stability in the equity markets turned out to be a key factor that benefitted the perceived riskier aussie. The AUD/USD pair shot to a one-week high, though bulls struggled to capitalize on the move beyond mid-0.7200s amid reviving US dollar demand.

Firming expectations for an eventual Fed lift-off in March remained supportive of elevated US Treasury bond yields and acted as a tailwind for the greenback. Nevertheless, the AUD/USD pair, so far, has held in the positive territory and was last seen trading around the 0.7240 region during the early North American session.

Looking at the technical picture, the recent recovery from the 2021 low – levels just below the key 0.7000 psychological mark – has been along an upward sloping channel. Given the sharp decline from the October 2021 swing high, the mentioned trend channel seems to constitute the formation of a bearish flag pattern.

That said, neutral technical indicators on the daily chart haven't been supportive of a firm near-term direction and warrant some caution before placing aggressive bets. Hence, it will be prudent to wait for a convincing break below the channel support, currently near the 0.7180 area, before positioning for a further decline.

The AUD/USD pair might then accelerate the downward towards testing the 0.7100 round-figure mark. The downward trajectory could further get extended towards the 0.7060-55 intermediate support before the pair eventually drops back to challenge the 0.7000 mark.

On the flip side, a sustained strength beyond the 0.7250 area has the potential to lift the AUD/USD pair towards the 200-day SMA, just ahead of the 0.7300 mark. Some follow-through buying should pave the way for a move towards challenging the trend-channel resistance, around the 0.7345 region, which should act as a pivotal point.

AUD/USD daily chart

Technical levels to watch