AUD/USD Price Forecast: Consolidates near 0.7000 as bulls await 38.2% Fibo. breakout

The AUD/USD pair struggles to capitalize on a modest bullish gap opening on Monday and oscillates in a narrow band around the 0.7000 psychological mark through the Asian session.

The US Dollar (USD) weakens in reaction to renewed optimism over a potential diplomatic resolution to end a five-month-old US-Iran conflict. Furthermore, a slump in crude oil prices eases inflation fears and tempers US Federal Reserve (Fed) expectations, which is seen as another factor undermining the Greenback.

Adding to this, expectations of another interest rate hike by the Reserve Bank of Australia (RBA) lend additional support to the AUD/USD pair. Traders, however, seem hesitant to place aggressive directional bets and might opt to wait on the sidelines ahead of the crucial FOMC monetary policy meeting this week.

From a technical perspective, the AUD/USD pair keeps a constructive near-term bias above the 23.6% Fibonacci retracement levels of the May-June downfall. This comes on top of the recent goodish rebound from the 200-day Simple Moving Average (SMA) and backs the case for a further near-term appreciation.

Momentum readings also back this mildly bullish stance, with the Relative Strength Index (RSI) hovering just above the 50 line and the Moving Average Convergence Divergence (MACD) holding in positive territory with a modestly positive histogram. This hints that upside pressure is slowly building rather than exhausted.

However, it will still be prudent to wait for sustained strength and acceptance above the 38.2% Fibo. level at 0.7019 before placing fresh bullish bets on the AUD/USD pair and a subsequent move to the 50% retracement at 0.7066. A sustained break above these levels would open the way toward the 61.8% Fibo. at 0.7113 and then 0.7180, with the swing high at 0.7265 acting as a more distant cap.

On the downside, first support emerges at the 23.6% retracement at 0.6961, ahead of the 200-day SMA around 0.6901, while a deeper slide would expose the Fibonacci anchor zone near 0.6867.

AUD/USD daily chart