The AUD/USD pair rallied 0.35% to trade near 0.6710 during Monday’s European session. The Aussie dollar posted sharp gains as the US Dollar (USD) underperformed across the board following news that US federal prosecutors have filed criminal charges against Federal Reserve Chair Jerome Powell related to the alleged mismanagement of renovation funds for the central bank’s Washington headquarters.
Consequently, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading 0.3% lower around 98.80 at the time of writing. In response to the charges, Chair Powell has stated that the accusations regarding cost overruns are merely a pretext designed to pressure him into cutting interest rates.
On the economic front, investors are awaiting the release of US Consumer Price Index (CPI) data for December on Tuesday. Meanwhile, Australian Dollar traders are looking ahead to Thursday’s release of domestic employment data for December.
AUD/USD Technical Outlook
AUD/USD is trading higher around 0.6708 at the time of writing. The 20-day Exponential Moving Average (EMA) is rising, and with the price holding above it, a bullish bias is sustained. The average’s slope has firmed recently, indicating steady demand.
Further supporting positive momentum is the 14-day Relative Strength Index (RSI) at 59, which sits above the midline. Initial support is established at the rising 20-day EMA, currently at 0.6681.
As long as the pair respects this ascending average, dips are likely to remain contained, and the trend could extend toward the 0.6800 round level. Conversely, a daily close below this indicator would undermine the positive setup and open room for a deeper pullback toward the October 29 high of 0.6618.
