AUDUSD bounced off support around the .7615 area once more and is now making its way back to the top of its short-term range visible on the 1-hour time frame. Price could find resistance near .7700 and head back to the bottom again.
The 100 SMA crossed above the longer-term 200 SMA to show that the path of least resistance is to the upside, keeping price supported until it tests the ceiling or perhaps breaks higher. In that case, the pair could head north by an additional 100 pips or roughly the same height as the chart formation.
Stochastic is also heading north so AUDUSD could follow suit but is closing in on the overbought area. Once the oscillator hits this region and turns lower, selling pressure could increase and trigger another move towards support or even a breakdown.
The US dollar has gained strong support on Fed Chairperson Yellen’s hawkish remarks, affirming that a March interest rate hike could be possible. She downplayed the recent miss in average hourly earnings, citing that tightening labor market conditions could keep upside pressure on wages. Other Fed officials and FOMC voting member Kaplan echoed this upbeat sentiment and confirmed that three rate hikes could be possible this year.
However, the Aussie has also been able to put up a strong fight, thanks to the less dovish than expected RBA statement last week. The central bank acknowledged that commodity prices have been picking up and that China’s performance continues to improve, something that was supported by the latest batch of data. Since China is Australia’s largest trading partner, this could mean higher demand for commodity products.