- AUD/USD is reversing a slight intraday decline, hitting a near two-week high on Tuesday.
- The prevailing selling trend around the USD continues to support intraday upside.
- A break through the 0.6865-0.6860 confluence supports the prospect of further gains.
The AUD/USD pair is attracting buying near 0.6860 on Tuesday, turning positive for the third day in a row. The pair is currently near a two-week high, with bulls waiting for a sustained move beyond the 0.6900 round number.
US dollar selling remains unchanged during the first half of the European session, emerging as a key factor acting as a tailwind for the AUD/USD pair. However, the rally lacks follow-on buying as investors eagerly await crucial US consumer inflation numbers due out today.
From a technical point of view, the prospect of further gains is supported by the emergence of new purchases near the 0.6865-0.6860 confluence cut-off point. The area shown includes the upper end of the one-month-old descending channel and the 38.2% Fibonacci retracement level of the decline from August to September.
This should now act as a pivot point for intraday traders. Any subsequent pullback could be seen as a buying opportunity near the overnight swing low, around the 0.6825 area. This should in turn limit any further losses for the AUD/USD pair near the 0.6800 round or 23.6% Fibo. level.
A convincing break below the latter will indicate that the corrective rebound has run out of steam and shift the bias back in favor of bearish traders. The AUD/USD pair could then drop to the 0.6730 intermediate support on the way to the 0.6700 and YTD lows around the 0.6680 region.
On the other hand, sustained strength beyond 0.6900 is likely to face stiff resistance near the 100-day SMA, currently around the 0.6960 area. Some subsequent purchases should pave the way for further appreciation and enable AUD/USD pair regain a psychological mark of 0.7000.