AUD/USD bounced back above the 0.6600 level after facing selling pressure on Friday. The US Dollar weakened on Monday, supporting riskier assets like the Australian dollar. This was also fueled by rising commodity prices, including copper and iron ore.
The Reserve Bank of Australia recently kept its interest rate steady at 4.35%, with a neutral policy stance. The bank expects inflation to rise in the short term before returning to its target range by 2026. Governor Michele Bullock hinted at potential rate hikes but market expectations lean towards a decline in the next six months.
Both the RBA and the Federal Reserve are expected to implement easing measures later than other G10 countries. This could limit further gains in AUD/USD as the Fed aims for monetary policy tightening while the RBA may consider easing later in the year.
Technically, AUD/USD could test the May high of 0.6647, with support at the 200-day SMA at 0.6520. Resistance levels include 0.6647 and 0.6667. The four-hour chart shows buying momentum picking up, with immediate support at 0.6585 and 0.6557.
Overall, as long as AUD/USD stays above the 200-day SMA, further gains are likely.