AUDUSD bounced off the bottom of its descending channel on the 4-hour chart and could be due for another test of the top. The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse.

These moving averages might also be enough to hold as dynamic resistance and keep gains in check, too, before price even reaches the top of the channel around .7200. Stochastic is already starting to make its way down from the overbought zone to indicate that selling pressure is building up. RSI, on the other hand, has some room to climb so buyers could still take price higher.

Risk appetite has improved lately and was able to lift the higher-yielding Australian dollar versus the Greenback. However, these gains could still be limited as there are still plenty of fundamental uncertainties in the markets.

Besides, expectations of another Fed hike could stay supported until the end of the year as leading indicators show further strength. This could drive the value of the dollar higher while at the same time weighing on risk appetite. After all, demand for commodities could take hits as higher borrowing costs bite into business and consumer spending. To top it off, trade jitters in China could also wind up hurting demand for Australia’s raw materials.

On the flip side, the Aussie is positively correlated to gold so any strong gains in this precious metal could wind up keeping the currency afloat. As for monetary policy, the RBA does not seem eager to hike interest rates anytime soon, so the dollar might retain its leverage in this aspect.