AUD/USD Price Analysis: Sets to test 0.7000 for the first time in five months

• Aussie bulls are aiming to recapture the psychological resistance of 0.7000 amid an upbeat market mood.
• A breakout of the Rising Channel has strengthened the Australian Dollar.
• The RSI (14) has shifted into the bullish range of 60.00-80.00, which conveys that the bullish momentum has been activated.

The AUD/USD pair is inches far from recapturing the critical resistance of 0.6980 in the Asian session and is likely to extend further to near 0.7000. The Aussie asset has sensed buying interest as risk-sensitive assets like S&P500 futures are extending their gains further. Despite three consecutive bullish trading sessions, S&P500 futures are still aiming higher, which indicates that bulls are not out of steam.

The US Dollar Index (DXY) is hovering around a fresh seven-month low at 101.80 and is not expected to display any meaningful rebound move amid the risk appetite theme. A spree of inflation softening in the United States is going to force the Federal Reserve (Fed) to employ a less-hawkish tone in announcing February’s monetary policy.

On a four-hour scale, the Aussie asset has delivered a breakout of the Rising Channel, which indicates volatility expansion. The 20-and 50-period Exponential Moving Averages (EMAs) at 0.6916 and 0.6817 respectively are upward-sloping, which adds to the upside filters.

Also, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which conveys that the bullish momentum has been activated.

A decisive move above the psychological resistance of 0.7000 will drive the Aussie towards August high at 0.7137. A break above August high will send the major toward June 9 high around 0.7200.

On the contrary, a downside move below December 29 low at 0.6710 will drag the major further towards December 22 low at 0.6650 followed by November 21 low at 0.6585.

AUD/USD four-hour chart