AUDUSD continues to trade above an ascending trend line on its 1-hour chart but is retreating off its latest highs. Price is testing support at the 38.2% Fibonacci retracement level at .7725.

A larger pullback could take it down to the 50% level closer to the .7700 major psychological level or the trend line support at the 61.8% Fib or .7671. If any of the Fibs hold as support, price could recover to the swing high just past .7800 and beyond.

The 100 SMA is above the 200 SMA to confirm that support is more likely to hold than to break. In addition, the 200 SMA lines up with the 50% Fib to add to its strength as a floor.

Stochastic has been indicating oversold conditions for quite some time, and turning higher would mean that buyers are about to take over. RSI also seems to be bottoming out without reaching the oversold region, which suggests that AUD bulls are eager to return.

Earlier today, Australia reported stronger than expected retail sales for March, with consumer spending up by 1.4% versus the estimated 1.0% increase. This comes after a 0.8% decline in retail sales for February. Note that Australia has also reported back-to-back strong gains in hiring, although the latest figures were mostly due to part-time employment.

There are no major reports due from both economies in the next few days, although Friday’s manufacturing and services PMIs for April are worth watching. Both the US and Australia are expecting improvements, which would reflect a faster pace of business expansion for the month, and these could bring more risk appetite in the markets.

Vaccination programs and the reopening of several economies would likely lift demand for raw materials and commodities, which would then be positive for Australia. In addition, stronger business optimism would also favor higher-yielding assets and currencies while leading to declines for safe-havens like the US dollar.