AUD/USD broke through a key short-term resistance level on Wednesday, around 1.0685, represented by January 26th and 31st highs. The pair surged through this area today, and hit a high of 1.0725 and is now testing the bearish trend line off September and October 2011 highs, at 1.0765 and 1.0753 respectively.
The pair is also locked in a rising channel from early January, and a break above October’s high of 1.0765 should see the pair accelerate higher and test the top of the rising channel around 1.0850.
Downside risks are posed by a failure to break above the key resistance represented by the bearish trend line, with technical oscillators now moving into overbought levels on the daily chart. A break lower should be supported by the bottom of the rising channel around 1.0600, but a move below this support could see a move towards the 20-day moving average currently at 1.0443.