AUD/USD: keep your eyes peeled on 0.72664

AUD/USD has had a pretty good run since mid-May. The pair has climbed from a low of 0.68290 on 12 May 2022, breezing past the 2 May swing low of 0.70300 along the way, to reach a high of 0.72039 on 31 May 2022. Retracements on the way up, if any, have been too shallow for words. The Aussie has clearly been benefiting from what has been a more 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. In turn, that will help underpin further interest rate rises from the RBA. A widening in the gap between Australian and US short-dated yields have certainly supportive for AUD/USD.    

Still, AUD/USD is pushing up toward some seriously basic, but important technical levels. First, there is the last 5 May corrective swing high of 0.72664 from the current downtrend. From a market structure perspective, 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 the time of writing.

Buyers should not discount those levels as potential areas of key resistance as price moves higher. Should prices retrace, 0.7122-0.70638, may provide decent levels to re-buy. Meanwhile, a steeper drop may point to more range-bound conditions before a potential continuation of the recent downtrend.