• AUD/USD attracts some dip-buyers on Friday amid a modest USD weakness.
• The divergent Fed-RBA policy outlook offers additional support to the major. 
• Bulls now await Fed Chair Jerome Powell’s speech before placing fresh bets.

The AUD/USD pair regains positive traction on Friday and for now, seems to have stalled its modest retracement slide from the 0.6760 area, or over a one-month high touched earlier this week. Spot prices stick to intraday gains through the first half of the European session and currently trade around the 0.6725 region, up 0.30% for the day.

The US Dollar (USD) struggles to capitalize on the overnight recovery from the YTD low and attracts fresh sellers amid dovish Federal Reserve (Fed) expectations, which, in turn, is seen lending some support to the AUD/USD pair. In fact, the markets now seem convinced that the US central bank will begin its policy easing cycle in September and have fully priced in a 25 basis points (bps) rate cut. Furthermore, the CME Group's FedWatch Tool indicates the possibility of a larger, 50 bps rate cut next month and about a 100 bps of easing by the end of this year. 

The Australian Dollar (AUD), on the other hand, continues to draw support from the Reserve Bank of Australia's (RBA) hawkish stance, showing readiness to hike interest rates again in the face of more upside risks to inflation. This is seen as another factor acting as a tailwind for the AUD/USD pair. Bulls, however, might refrain from placing aggressive bets and prefer to wait for Fed Chair Jerome Powell's speech at the Jackson Hole Symposium. Investors will look for cues about the rate-cut path, which will influence the USD and provide some meaningful impetus. 

From a technical perspective, the recent breakout through the 0.6600 confluence – comprising 100- and 200-day Simple Moving Averages (SMA) – and a subsequent strength beyond the 0.6700 mark was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are holding comfortably in positive territory and are still away from being in the overbought zone. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the upside and supports prospects for an extension of the recent strong recovery from the YTD low touched earlier this month.

Bulls, however, might wait for some follow-through buying beyond the 0.6750 horizontal barrier before placing fresh bets. The AUD/USD pair might then aim to challenge the YTD peak, around the 0.6800 round figure mark, before climbing further towards the December 2023 swing high, around the 0.6870 region.