AUD/USD pares post-hawkish RBA gains, but still well supported at 0.7600 level

• AUD/USD is paring its impressive post-hawkish RBA gains and is back to trade near 0.7600.
• The buck has been picking up recently as US stocks fall/yields rally after hawkish Fed commentary.
• The pair earlier lept as high as the 0.7660s after the RBA dropped its reference to “patience”, signaling coming hikes.

Though the pair continues to trade with hefty post-hawkish RBA rate decision gains, AUD/USD has pared back from the multi-month highs it hit above 0.7650 earlier in the day and is now trading closer to 0.7600. The pullback comes as US equity markets take a knock and US bond yields rally in wake of hawkish commentary from Fed Vice Chair Lael Brainard, who indicated rapid balance sheet reduction could begin as soon as May. The knock to sentiment coupled with a boost to the buck has weighed on AUD/USD, as it has other major currency/USD pairs.

AUD/USD still stands to close out the session bout 1.0% higher, after marking what technicians will likely see as a significant breakout to the north of Q4 2021 highs in the 0.7550 area during Asia Pacific trade. The Aussie bulls took control after the RBA dropped its reference to being “patient” when it comes to rate hikes and, as a result, the market’s base case seems to be for a first 25 bps rate hike to come in June. How that AUD/USD has broken out to fresh annual highs, the bulls will be marking their next upside targets.

Those are likely to include the June 2021 highs in the 0.7775 area, the May 2021 ner 0.7900 and the February 2021 highs at 0.8000. Technicians note that AUD/USD also note that AUD/USD is very likely to soon be the beneficiary of a “golden cross”, where the 50-Day Moving Average moves above the 200DMA. This could help infuse further bullishness.

Given the pair’s massive more than 6.0% rebound from mid-March sub-0.7200 lows, a further 3-5% to challenge these highs in the coming months doesn’t seem too far-fetched. Against a backdrop of structurally elevated commodity prices thanks to the Russo-Ukraine war, stock markets that remain resilient and an RBA that is finally taking action to at least keep up with the majority of the rest of its already tightening fellow G10 central banks, further upside seems plausible from a fundamental standpoint.