AUDUSD has been in a steady downtrend since December last year and has been trading below a descending trend line connecting its recent highs on the 4-hour chart. 

Price seems to have broken above the trend line recently though, indicating that a reversal is in the works.

In addition, AUDUSD has also broken above the moving averages, with the shorter-term EMA crossing above the longer-term EMA on the same time frame. This also confirms that the downtrend is about to turn and that an uptrend is taking hold.

Stochastic is already indicating overbought conditions and is moving lower, suggesting that a quick pullback to the broken trend line might be in order before the uptrend resumes. Price could find support around the .7700 major psychological level before moving higher, possibly until the .8000 major psychological resistance and beyond.

The end of the month and quarter could usher in profit-taking moves across the markets, which means that traders are bound to exit their short AUDUSD trades for the period and possibly trigger more gains for the pair. Risk appetite has been present in the financial markets anyway, and this could keep the higher-yielding Australian dollar supported.

Event risks for this trade today include the US durable goods orders report and speeches by FOMC officials. Just recently, the Fed indicated that they are moving closer to policy tightening but they might hike rates later than initially expected. This has caused a dollar selloff, as traders pushed back their rate hike forecasts.

Meanwhile, the RBA has pointed out that they almost cut interest rates in their previous monetary policy meeting, which suggests a high likelihood of another rate cut in their next statements. This could keep AUDUSD gains in check, especially if economic data supports a dovish bias.

By Kate Curtis from Trader’s Way