AUDUSD is once again testing the neckline of the complex double bottom pattern on its 4-hour time frame. 

A break past the resistance around the .7900 major psychological level could confirm the potential reversal, which might last by around 350 pips or the same height as the chart pattern.

Stochastic is already in the overbought area though, which means that buyers are starting to lose steam. If the resistance still holds, AUDUSD could head back to the previous lows around the .7550 minor psychological level. The short-term exponential moving average has just crossed above the long-term EMA, suggesting that a move higher might be likely.

This could depend on how the upcoming FOMC statement turns out, as dovish remarks from the Fed could lead to another round of dollar selling while upbeat comments could allow the Greenback to regain ground. Recall that data from the US economy has been weaker than expected recently, prompting market participants to doubt that the Fed can afford to hike interest rates this year.

There are no major event risks lined up from the Australian economy this week, although recent reports from Australia and its major trade partner China suggest that further downside could be seen. Apart from that, RBA Governor Stevens also mentioned that they will be keeping monetary policy accommodative, sparking speculations that another rate cut might be seen next month.

Risk appetite could also have a significant impact on this pair in the coming days, as the Greek debt talks continue to drag on and weigh on higher-yielding currencies. A deal within the week could reduce fears of debt contagion in the euro zone and the global economy, reviving support for riskier currencies like the Australian dollar.

By Kate Curtis from Trader’s Way