AUD/USD is firmly maintaining a Bullish Bias following a Powerful Squeeze initiated in March, as the Australian economy is showing signs of recovery from the coronavirus impacts.
In fact, the Australian dollar is firming up along with the rallying Australian stock market. Reserve Bank of Australia Governor Philip Lowe said the economy is faring better than initially feared.
In early May, the central bank kept its key interest rate unchanged at 0.25% as expected.
Later, official data showed that Australia’s jobless rate stepped up to 6.2% in April (8.2% expected) from 5.2% in March. And Westpac Bank reported that Consumer Confidence rose 16.4% on month in May, compared to a drop of 17.7% in April.
Obviously, Governor Lowe is right.
Meanwhile, the Aussie is also taking advantage of a softening U.S. dollar amid a risk-on environment. Prices of U.S. stocks and other assets regarded as risky are rebounding recently as investors have been encouraged by potential development of coronavirus vaccines and further easing of coronavirus-induced lockdown measures around the world.
However, investors should not overlook potential impacts of heightened tensions between the U.S. and China, which could serve to reduce risk appetite across markets.
On a Daily Chart, AUD/USD has emerged from a Trading Range initiated in late-April.
Currently it is trading at levels above the ascending 20-day moving average, which stands above the 50-day one.
Also, the Bullish Pattern of Higher Lows in place since March remains intact.
Therefore, the technical configuration favors a bullish bias for AUD/USD.
Bullish investors should expect Overhead Resistance at 0.6750 (around the high of February) and 0.6930 (around a key resistance seen in January).
Only a return to the Key Support at 0.6400 would call for a Bearish Reversal.