AUD/USD Price Forecast: Positive momentum points to further upside

AUD/USD holds firm near a two-and-a-half-month high on Wednesday, supported by broad US Dollar (USD) weakness, while technical indicators point to further upside. At the time of writing, the pair trades around 0.7118, up 0.43% on the day, after reaching an intraday high of 0.7129.

The US Dollar Index (DXY), which gauges the Greenback's value against a basket of six major currencies, trades near 98.90, down 0.75% on the day and touching its lowest level since May 29.

Strategists at Rabobank "continue to see scope for a shallow uptrend in AUD/USD into next year," with the move higher expected to be "aided by November RBA rate hike risk" and underpinned by Rabobank’s call that "the Fed will avoid tightening policy this year."

Australia’s employment report, due on Thursday, could provide fresh direction for the pair. The economy is expected to add 15K jobs in July, following a gain of 76.3K in June, while the Unemployment Rate is forecast to stay unchanged at 4.4%.

Technical Analysis

AUD/USD maintains a bullish near-term bias as spot holds above the 21-, 50-, 100- and 200-day Simple Moving Averages (SMAs) clustered between roughly 0.6946 and 0.7065.

The Relative Strength Index (RSI) on the daily chart is near 65, suggesting firm but not extreme upside momentum, while the Moving Average Convergence Divergence (MACD) indicator remains slightly positive, hinting that buyers still control the short-term tone as the pair edges towards overhead resistance.

On the topside, the 0.7150-0.7200 region forms a strong resistance zone. A clear break above this area could open the door to a retest of this year’s peak near 0.7270.

On the downside, immediate support is seen at the recent close around 0.7118, followed by the 100-day SMA at 0.7065 and the 21-day SMA at 0.7036, before deeper demand is expected around the 50-day SMA at 0.6996 and the longer-term 200-day SMA at 0.6946.