Market Overview The AUD/USD pair is making another attempt to reclaim the 0.6750 level during the Asian session on Tuesday. This movement is driven by a subdued US Dollar and an upbeat market mood, despite deteriorating Australian consumer and business confidence. Market participants now turn their focus to Fed Chair Powell's upcoming testimony.

Key Levels and Technical Outlook If the bulls manage to push AUD/USD above the July high of 0.6761 (recorded on July 8), the pair could then target the December 2023 high of 0.6871, followed by the July 2023 peak of 0.6894 (recorded on July 14), before facing the critical 0.7000 resistance level.

Conversely, bearish attempts might see the pair retreat first to the June low of 0.6574 (recorded on June 10) and then to the crucial 200-day SMA at 0.6563. A further decline could lead to a revisit of the May low of 0.6465 and the 2024 low of 0.6362 (recorded on April 19).

Overall, the uptrend is expected to continue as long as AUD/USD trades above the 200-day SMA. The 4-hour chart reveals a significant resurgence in upward momentum, though 0.6761 remains an initial barrier. Immediate support is found at 0.6709, ahead of the 55-SMA at 0.6685. The RSI has dropped to the 61 region.

Fundamental Analysis The strong uptrend in AUD/USD has experienced a slight pullback at the beginning of the week, returning to negative territory shortly after hitting new six-month highs in the 0.6760-0.6765 range on Monday. This corrective move is attributed to a minor rebound in the US Dollar as investors digest mixed US Nonfarm Payrolls data and its potential impact on the Fed's interest rate plans.

Additionally, recent weakness in copper and iron ore prices has contributed to the Australian dollar's retracement following several days of gains.

On the monetary policy front, the Reserve Bank of Australia (RBA), like the Federal Reserve (Fed), is expected to be among the last of the G10 central banks to begin cutting interest rates. The RBA recently maintained a hawkish stance, keeping the official cash rate at 4.35% and signaling flexibility for future decisions. The minutes from the latest RBA meeting highlighted concerns about "uncertainty around consumption data and clear evidence of financial stress among many households."

The swaps market currently assigns a 25% probability of a rate hike at the upcoming August 6 meeting, increasing to around 50% in subsequent meetings. Overall, the RBA is not in a hurry to ease policy, anticipating that it will take some time before inflation sustainably falls within the 2-3% target range.

Potential easing by the Fed, contrasted with the RBA's likely extended restrictive stance, could support AUD/USD in the coming months. However, concerns about sluggish momentum in the Chinese economy may hinder a sustained recovery of the Australian currency as China continues to face post-pandemic challenges.

On the domestic data front, Home Loans contracted by 2.0% MoM in May, and Investment Lending for Homes decreased by 1.3% during the same period.

AUD/USD: Bulls Aim to Reclaim 0.6750 Amid Positive Sentiment and Weak US Dollar