AUD/USD Price Analysis: Upside potential seems limited ahead of RBA minutes on Tuesday

• AUD/USD gained follow-through traction for the second successive day on Monday.
• Mixed technical setup warrants caution before placing aggressive directional bets.
• Investors eye RBA meeting minutes/RBA Governor Lowe’s speech for a fresh impetus.

The AUD/USD pair built on Friday's recovery move from the 0.7275 area, or over one-month lows and gained some follow-through traction on the first day of a new week. The momentum pushed the pair to three-day highs, around the 0.7370 region, though stalled just ahead of 100-hour SMA.

The US dollar reversed a major part of its modest intraday losses following the release of the upbeat Empire State Manufacturing Index, which jumped to 30.9 in November from 19.8 previous. That said, sliding US Treasury bond yields kept a lid on any meaningful gains for the greenback. Apart from this, the risk-on impulse in the markets acted as a tailwind for the perceived riskier aussie.

Meanwhile, RSI on the 1-hour chart is already flashing slightly overbought conditions. Moreover, technical indicators on the daily chart – though have recovered from the bearish territory – are yet to gain any meaningful positive traction. The mixed technical set-up warrants caution for aggressive traders ahead of RBA meeting minutes/RBA Governor Philip Lowe's speech during the Asian session on Tuesday.

From current levels, any subsequent move up might confront stiff resistance around the 0.7380 region, or the 38.2% Fibonacci level of the 0.7557-0.7282 downfall. Some follow-through buying, leading to a subsequent strength beyond the 0.7400 mark will be seen as a fresh trigger for bullish traders. The AUD/USD pair might then aim to test the next relevant hurdle near the 0.7425-30 supply zone.

On the flip side, the 23.6% Fibo. level, around the 0.7340 region, now seems to protect the immediate downside. This is followed by support near the 0.7300 round figure, which if broken decisively will set the stage for an extension of the recent rejection slide from the very important 200-day SMA. The downward trajectory could then drag the AUD/USD pair towards the 0.7240 support zone.

AUD/USD 1-hour chart

Technical levels to watch