AUD/USD has had a pretty good run since mid-May. The pair has climbed from a low of 0.68290 on May 12, 2022, breezing past the May 2 swing low of 0.70300 along the way to reach a high of 0.72039 on May 31, 2022. Retracements on the way up have been shallow. The Aussie has benefited from a relatively risk-positive environment over the prior two weeks.
But the Aussie’s recent shine stretched beyond global risk appetite. Early positive assessments of Australia’s economy were proven correct with Wednesday’s release of Q1 GDP, which showed the economy expanded by a better-than-expected 33.3% y/y. That will help underpin further interest rate rises from the RBA. A widening gap between Australian and US short-dated yields has been supportive for AUD/USD.
Still, AUD/USD is pushing up toward some seriously basic but important technical levels. First, there is the last May 5 corrective swing high of 0.72664 from the current downtrend. From a market structure perspective, the price would need to pierce this level and establish a new lower high before AUD/USD shift trends. Then, just above, buyers will need to contend with the daily 200 exponential moving average, which stood at 0.72680 at writing.
Buyers should not discount those levels as potential areas of key resistance as the price moves higher. Should price retrace, 0.7122-0.70638 may provide decent levels to re-buy based on prior congestion levels. Meanwhile, a steeper drop below may point to more range-bound conditions before a potential continuation of the recent downtrend. Much will depend on how risk appetite evolves over the coming days.
