AUDUSD is neutral in the short term after a strong rally pushed the market to overbought conditions and consequently upside momentum faded. AUDUSD remains under corrective pressure after failing to breach the key 0.7900 level but came close to it last week.
The second bullish phase that started after the break above the 200-day moving average in December is still in progress and there are no signs of a reversal in the trend yet. The recent pullback from the January 5 high of 0.7874 saw AUDUSD move into a consolidation phase and there is scope for another push higher towards the major 0.7900 level.
Only a daily close below 0.7800 would indicate that a short-term top is in place at 0.7874. Strong support is expected at the 200-day MA which is converging with the key 0.7700 level. A move lower from here would turn the focus to the December 8 low at 0.7500.
Short-term price action looks soft for now. AUDUSD needs to regain upside momentum soon to rise above 0.7900, otherwise, downside risk will increase quickly.