AUD/USD - And the rise continues... nears 76.4% Fib level

• AUD/USD rose to the highest level since Sept. 25.
• Short-term overbought conditions are a risk to AUD rally.

The AUD/USD pair continues to cheer the broad-based USD selling and the rise in the Chinese Yuan.

The currency pair extended the Asian session gains to 0.7961; the highest level since Sept. 25. As of writing, the pair is trading at 0.7945 and looks set to test 0.7978 (76.4% Fib R of Sep-Dec decline).

Markets continue to price-in heightened odds of faster policy tightening in Europe and Japan. Also, as per Reuters report, the greenback is being sold seemingly due to fears that the Fed may have to put brakes on policy tightening on the untimely end of the current economic cycle.

Hence, the near 90-degree rally from the Dec. 8 low of 0.7501 is showing no signs of exhaustion. That said, the technical charts indicate a potential for a minor pullback.

AUD/USD Technical Outlook

Analysts at Brown Brothers Harriman detail the short-term technical picture as follows- "The Slow Stochastics are rolling over and the MACDs appear poised to do the same in the coming day. A close below $0.7850 would be the first sign of weakness, but it may take a break of $0.7800 to be convincing."

AUD/USD Technical Levels

A break above 0.7978 (76.4% Fib R of Sep-Dec decline) would expose 0.80 (psychological hurdle). A close above the same could yield test of supply around 0.8125 (September high).

On the downside, the violation at 0.7901 (session low) would open doors for a pullback to 0.7879 (5-day MA) and 0.7862 (10-day MA).