The AUD/USD pair sticks to its intraday gains through the early part of the European session and currently trades around the 0.6685 region, up over 0.25% for the day.

Expectations that the Federal Reserve (Fed) will start its rate-cutting cycle in September drag the US Dollar (USD) to its lowest level since January This, along with the Reserve Bank of Australia's (RBA) hawkish stance, turn out to be a key factor acting as a tailwind for the AUD/USD pair for the third successive day. 

Meanwhile, technical indicators on the daily chart are holding comfortably in positive territory and are still away from being in the overbought zone. This, along with the recent breakout through the 200-day Simple Moving Average (SMA), suggests that the path of least resistance for the AUD/USD pair is to the upside

Bulls, however, need to wait for some follow-through buying beyond the 0.6700 handle before positioning for an extension of the recovery from the 0.6520-0.6515 area, or the YTD low touched earlier this month The AUD/USD pair might then climb to the 0.6745 intermediate hurdle before aiming to conquer the 0.6800 mark.

On the flip side, the Asian session low, around the 0.6650 area, is likely to act as immediate support ahead of the 0.6600 mark, or the 200-day SMA resistance breakpoint. The latter should now act as a strong base, which if broken might prompt aggressive technical selling around the AUD/USD pair and pave deeper losses. 

The next relevant support is pegged near the 0.6565 area, below which the slide could extend towards the 0.6520-0.6510 region. Some follow-through selling below the 0.6500 psychological mark will suggest that the move-up witnessed over the past two weeks or so has run out of steam and shift the bias in favor of bearish traders.

AUD/USD daily chart

(Click on image to enlarge)

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