AUD/USD Forecast: Acceptance above 0.6800 sets the stage for move towards 200-day SMA

• AUD/USD climbs to a fresh multi-month high on Thursday amid the prevalent USD selling bias.
• The overnight dovish remarks by Fed Chair Powell and a positive risk tone weigh on the buck.
• Both the fundamental and technical set-up supports prospects for additional gains for the pair.

The AUD/USD pair gains traction for the third straight day on Thursday and climbs to its highest level since September 13 during the Asian session. The US Dollar languishes near a multi-month low in the wake of dovish comments by Federal Reserve Chair Jerome Powell on Wednesday and acts as a tailwind for the major. Speaking at the Brooking Institution in Washington DC, Powell sent a clear message that the US central bank will soften its stance and said that it was time to moderate the pace of interest rate hikes. The profound market reaction was evident from a steep decline in the US Treasury bond yields. In fact, the benchmark 10-year Treasury note drops to a near two-month low and continues to weigh on the greenback.

Apart from this, the overnight massive rally in the US equity markets further undermines the safe-haven buck and benefits the risk-sensitive Aussie. The AUD/USD bulls, meanwhile, seem rather unaffected by the disappointing release of Australia's Private Capital Expenditure, which fell 0.6% during the third quarter against the 1.5% rise expected. Moreover, China's Caixin Manufacturing PMI - though improves to 49.4 in November from 49.2 the previous - remains in contraction territory for the fourth consecutive month. This, however, does little to hinder the pair's upward trajectory amid the underlying bearish sentiment surrounding the USD. Market participants now look forward to the US macro data for short-term trading opportunities.

Thursday's US economic docket highlights the release of the Fed's preferred inflation gauge - the Core PCE Price Index - and ISM Manufacturing PMI. This, along with the US bond yields and the broader risk sentiment, will influence the USD price dynamics and provide some meaningful impetus to the AUD/USD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside and any meaningful dip should attract fresh buyers ahead of the US monthly jobs report (NFP) on Friday.

Technical Outlook

From a technical perspective, sustained strength and acceptance above the 0.6800 mark further validate the near-term positive outlook for the AUD/USD pair. Furthermore, oscillators on the daily chart are holding comfortably in the bullish territory and are still far from being in the overbought zone. This, in turn, supports prospects for a move towards reclaiming the 0.6900 round figure. Some follow-through buying beyond the 200-day SMA, currently around the 0.6920-0.6925 zone, should lift the AUD/USD pair beyond the 0.6950-0.6955 intermediate hurdle, towards the 0.7000 psychological mark.

On the flip side, any meaningful slide below the 0.6800 mark could attract fresh buying around the 0.6740-0.6735 horizontal support. The 0.6700 mark could act as the next relevant support, which is closely followed by the 100-day SMA, currently around the 0.6685 region. Failure to defend the said support levels might prompt some technical selling and drag the AUD/USD pair back towards the 0.6600 round-figure mark. A convincing break below the latter will negate the positive outlook and shift the near-term bias in favour of bearish traders.