**AUD/USD Price Forecast: Overbought RSI Raises Pullback Risk but Uptrend Remains Intact**
*Credit: Original article by Christian Borjon Valencia, FXStreet*
**Summary**
The AUD/USD currency pair has extended its upward movement, driven by a broadly weaker US dollar and sustained investor optimism about Australia’s economic prospects. Despite the clear positive momentum, technical signals such as the overbought Relative Strength Index (RSI) suggest the potential for a temporary pullback. Nevertheless, the broader uptrend appears to remain firm, supported by both technical and fundamental factors.
**Fundamental Overview**
The Australian dollar has benefited from improving economic data in Australia and softer US macroeconomic indicators, putting downward pressure on the greenback. Key themes influencing AUD/USD include:
– Divergence in central bank monetary policy expectations between the Reserve Bank of Australia (RBA) and the US Federal Reserve.
– Recent data suggesting a resilient labor market and stable inflation in Australia, mitigating the risk of RBA rate cuts in the near term.
– Increasing speculation of Federal Reserve rate cuts later in the year, which has weakened the US dollar against major peers.
– Positive sentiment around China’s economic stabilization, given Australia’s close trade ties with China.
– Support for risk-sensitive assets like the Australian dollar due to improved global risk sentiment.
**Technical Analysis: AUD/USD at Risk of Pullback But Uptrend Holds**
AUD/USD continues to trade within an established uptrend, recently posting multi-month highs. However, certain technical signals point to the likelihood of at least a short-term correction.
**Daily Chart: Key Levels**
– **Support levels**:
– 0.6680: Recent breakout area, likely to attract buyers on a pullback.
– 0.6620: 200-day Simple Moving Average (SMA), a pivotal level for maintaining the uptrend.
– 0.6570: Zone of prior consolidation and resistance, now a potential support.
– **Resistance levels**:
– 0.6730: Recent swing high and psychological level.
– 0.6800: Further resistance observed on the monthly chart.
– 0.6895: Year-to-date high.
**Relative Strength Index (RSI) and Momentum**
– The daily RSI indicator is currently above 70, a classic sign that the pair is overbought.
– Momentum remains positive, with price action comfortably above key moving averages (21, 50, and 200-day SMAs).
– The overextension on the RSI does not guarantee an immediate reversal but increases the probability of a short-term pullback or pause in upward momentum.
**Potential Price Scenarios**
– **Continuation Scenario**: Should AUD/USD break and close decisively above the 0.6730 resistance, the rally may extend toward 0.6800 and possibly toward 0.6895. Sustained positive momentum and strong sentiment would be required for this move.
– **Correction Scenario**
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