AUDUSD Testing Major Level

Risk Rally Helping AussieThe uptick in risk appetite this week linked to the reversal in Fed expectations has helped AUD rally sharply. With the market now anticipating that the Fed will shift into neutral mode on the back of a further rate hike this month, risk assets have been given a green light with stocks and commodities seen heavily bid. The Aussie has benefited nicely from this shift in risk appetite with AUDUSD rallying around 4.5% off the month’s lows.US Inflation Decline DeepensThe latest US CPI & PPI data this week have sharpened expectations of a shift in Fed policy beyond July. Looking at market pricing, traders are now eyeing a period of unchanged policy through to early next year when a rate cut is expected by end Q1. As USD continues to sell-off, AUD looks likely to enjoy further upside, helped by the lift in commodities prices also. Speculation of forthcoming stimulus in China is also helping drive bullish sentiment here meaning that, for now, the outlook remains firmly geared towards higher prices.Technical ViewsAUDUSDThe rally in AUDUSD off the .6681 level has seen the market trading sharply higher. Price is now testing the long-term bearish trend line and the structural resistance at .6857. This is a major resistance area for the pair and a break here will be firmly bullish, turning focus to a move higher towards the .7103 level above. To the downside, .6681 remains key support to watch.