AUD/USD trades up to 0.7475, its highest since 3 September
The pair is now flirting with the September highs of 0.7469-78 and is up over 0.8% on the day as the dollar is keeping weaker to start European trading and as we see a slightly more positive tilt in the equities space to start the session.
Buyers are still well in control and a break above the key resistance outlined above paves the way for a test of 0.7500 next before buyers may look towards perhaps testing the 200-day moving average (blue line) @ 0.7565.
I reckon the latter would be a prime area for sellers to start dipping their toes back into the water again, considering the sluggish dollar sentiment as of late.
I mean when you weigh up the policy divergence between the Fed and RBA, any major upside for AUD/USD is likely to be more capped in the bigger picture.
For now, it is tough to argue against the dollar's recent weakness but as we approach key levels pointed out above, expect the upside momentum to slowly lose its allure.
That being said, the dollar also does have its own challenges especially if the Fed makes a rather clear distinction that tapering and rate hikes are two separate events that warrants different circumstances - which they likely will.
