AUDUSD has been moving in a steady uptrend, trading above an ascending trend line connecting the latest lows of price action.

Price recently made a swing high near the .7350 minor psychological level before showing signs of a pullback. 

A correction could take the pair back down to the rising trend line support, which is near the 61.8% Fibonacci retracement level. A shallow pullback might last until the 38.2-50% Fib levels, with the latter coinciding with the .7250 minor psychological support. 

The 100 SMA is starting to cross above the 200 SMA to show that the uptrend is likely to carry on. These moving averages are also climbing near the ascending trend line, potentially adding to its strength as a support area.

Meanwhile, stochastic is making its way down from the overbought region to indicate a buildup in selling pressure. RSI is also heading lower so AUDUSD might follow suit.

Event risks for this trade setup include the release of Australia’s trade balance and retail sales figures. The earlier releases from the economy came in stronger than expected, with the GDP showing a 0.9% expansion and the RBA reiterating its shift to a less dovish stance. 

As for the US dollar, the upcoming NFP release could spur volatility, although market watchers are bracing themselves for an upbeat surprise since the ADP report and ISM PMI components showed employment gains. 

However, the pickup in risk appetite stemming from the Chinese yuan’s inclusion in the IMF SDR is favoring the higher-yielding Australian dollar versus the lower-yielding US dollar for the time being.

By Kate Curtis from Trader’s Way