- AUD/USD gained traction for the second straight day after the RBA announced its policy decision.
- Overbought RSI on the 1-hour chart, bearish oscillators on the daily chart warrant caution for bulls.
- A sustained strength beyond the 0.7120 area is needed to confirm that the pair has bottomed out.
The AUD/USD pair built on the previous day's goodish rebound from sub-0.7000 levels, or the lowest level since November 2020 and gained traction for the second successive day on Tuesday. The prevalent risk-on mood in the markets turned out to be a key factor that continued acting as a tailwind for the perceived riskier Australian dollar.
The buying interest picked up pace after the Reserve Bank of Australia announced its policy decision and kept the official rate on hold at the historic low level of 0.10%. In the accompanying statement, the RBA hinted that bond-buying will end in February, which sets the stage for a hike in July and provided a modest lift to the aussie.
The momentum pushed the AUD/USD pair to a two-day high, around the 0.7085 region, and 100-hour SMA, paving the way for a further near-term appreciating move. That said, RSI on the 1-hour chart is already flashing overbought conditions and technical indicators on the daily chart are still holding deep in the bearish territory.
Hence, any subsequent move up is more likely to confront stiff resistance and meet with a fresh supply near the 0.7100 round-figure mark. This, in turn, should cap the upside near the 0.7120 region, which should act as a key pivotal point for the AUD/USD pair. A sustained strength beyond will negate the bearish bias and trigger a short-covering move.
The AUD/USD pair might then accelerate the momentum towards testing the next relevant hurdle near the 0.7170-75 region before aiming to reclaim the 0.7200 round-figure mark.
On the flip side, the daily swing low, around the 0.7040 region, now seems to protect the immediate downside. Any further downfall might continue to find decent support near the key 0.7000 psychological mark. A convincing breakthrough the latter will be seen as a fresh trigger for bearish traders and prompt aggressive technical selling.
The next relevant support is pegged near the 0.6930 region before the AUD/USD pair eventually drops to test the 0.6900 mark. Some follow-through selling has the potential to drag the pair further towards the 0.6800 mark en-route the 0.6765-60 region in the near term.
AUD/USD 1-hour chart
