AUDUSD Rises to Four-Month High as Copper Sets Fresh Record

AUDUSD is climbing further, lifted by broad commodity gains and renewed copper strength that pushed the metal to another record level today.

Australia is a large exporter of raw materials, with iron ore, coal and liquefied natural gas at the top of the list. It also counts among the world's leading copper producers. Because of that, the Australian dollar is frequently referred to as a "commodity currency."

When commodity prices rise, Australia's export income and terms of trade have room to improve. That does not necessarily mean the Australian dollar will gain, but it can supply a fundamental tailwind. That tailwind is at work right now, helping AUDUSD reach its most elevated point since the middle of May.

The next technical ceiling is now being tested by buyers.

AUDUSD has moved up to 0.7224, carrying the pair into a notable swing area that spans 0.7221 to 0.7228. That region has guided the price since April and is now the most important challenge for the buyers.

A swing area is a price zone where support or resistance was established at some point in the past. Traders follow these zones closely, as earlier turning points can bring in buyers, sellers and profit-taking whenever the market returns to them.

Moving through 0.7228 is the first step, and holding above it counts just as much.

A fast reversal immediately after a marginal breakout would indicate that buyers were unable to keep hold. A lasting break above the zone, in contrast, would increase buyer confidence and put the May high of 0.72769 back into view.

On the longer-term charts, a double top is drawing closer.

The May high of 0.72769 was nearly a match for the May 2022 high of 0.72823. That sets up a significant longer-term double-top zone between the two levels.

A double top is frequently seen as resistance because the market has reached about the same price region before and then failed to push higher. Sellers might use that area to open positions, while buyers who came in at lower prices could look to realize profits.

Still, a double top offers resistance only until it is broken.

If AUDUSD can climb past 0.72823 and remain above it, the failed ceiling could act as a springboard for more upside. On a longer horizon, that would be a substantial bullish breakout and could encourage the market to head toward levels not yet seen.

Short-term risk is defined by the moving averages.

Even though the upside targets are coming into focus, successful trading also requires knowing where the bullish technical picture would start to break down.

For AUDUSD, the nearest risk-defining zones are the rising 100-hour and 200-hour moving averages:

• 100-hour moving average: 0.7183
• 200-hour moving average: 0.71787

Both averages came under test on Friday after the US jobs report was stronger than expected. The dollar benefited initially, pushing AUDUSD lower. But the pair found buyers at the moving-average support and bounced back.

That response was significant.

The strong US data presented sellers with a chance to take charge, yet they could not drive the price below the key averages. In other words, the sellers took their shot and missed. Buyers leaned on technical support, set their risk and kept command of the trend.

Under what conditions would the bullish view start to crack?

AUDUSD will remain firmly in buyers' hands as long as it stays above the rising 100-hour and 200-hour moving averages.

A decline below the 100-hour moving average would be the first sign that upside momentum is cooling. To turn the short-term bias more clearly back in favor of sellers, though, price would need to hold beneath both averages decisively.

For traders who want more upside, the route is fairly simple:

• Remain above the 100-hour and 200-hour moving averages to keep the bullish bias intact.
• Clear the 0.7221–0.7228 swing area and hold above it to confirm the next leg up.
• Aim for the longer-term double-top resistance from 0.72769 to 0.72823.
• A durable break above 0.72823 would reinforce the longer-term bullish outlook.

Fundamental support comes from strength in commodities, led by copper's record run. The technical price action is reinforcing that story, with AUDUSD registering new multi-month highs and sitting comfortably above its rising hourly moving averages.

Buyers will maintain control until price moves below those averages and stays beneath them.