The AUD/USD currency pair is currently seeing a significant increase in trading, reaching around 0.6708 as of the most recent press time. On Monday morning, the pair rebounded by 0.35%, approaching the 0.6710 level during European trading hours. Further reinforcing this upward momentum are multiple bullish, technical indicators that signal continued strong bullish sentiment from investors.
The 20-day Exponential Moving Average (EMA) is trending up, and the price is still holding well above this key support level. Given the continuing positive bias, this positioning remains supportive for the AUD/USD pair. It takes time to coalesce communities around that equity vision. The 14-day Relative Strength Index (RSI) is 59, far above the midline. This level adds to the overall positive momentum for the currency pair.
Technical Indicators Support Bullish Bias
The ascending 20-day EMA at 0.6681 acts as short-term support for the AUD/USD. Some analysts note that the currency pair is keeping well above its rising mean. They are counting on any downturns to be minor as long as this stance is held. This bearish trend might be able to reach out in the direction of the psychologically key level of 0.6800.
As market watchers know, any daily close below this important measure of the market’s tone could reverse the extremely bullish configuration now in place. Such a move might catalyze a more serious correction. Should the bearish momentum begin to take hold, the first downside target could be the October 29 high of 0.6618.
The US Dollar Index (DXY) is about 0.3% lower, trading below 98.80. The decline would likely be supportive for the AUD/USD cross. A weaker dollar usually increases the prices of other currencies in dollars.
Global Economic Context and Investor Sentiment
So too, of course, are the AUD/USD currency pair dynamics affected by broader economic forces. The US Dollar is the world’s currency, dominating foreign exchange markets globally. It represents upwards of 88% of all transactions, a staggering average of $6.6 trillion a day. After World War II, the dollar replaced the British Pound as the world’s global reserve currency. This change ensured the dollar’s supremacy in global mercantile trade.
So investors should be eagerly looking at the upcoming economic data as the true tell. The US Consumer Price Index (CPI) comes out on Tuesday. One major theme of this report will be to highlight unexpected trends in inflation that may serve to contradict and guide Federal Reserve policy actions. In the opposite scenario, where inflation retraces below 2% or we experience a sudden spike in unemployment, the Fed would want to lower interest rates. All else being equal, this would place downward pressure on the Greenback.
The Federal Reserve’s most direct tool for achieving their economic goals is interest rate adjustments. Yet even the faintest hint of a change in the monetary policy will rattle the currency markets. If a hawkish shift occurred, this would have a positive effect on the AUD/USD pair’s performance.
Market Outlook and Investor Strategies
Finally, as traders look to dollars in and dollars out of their positions, they’ll be looking at percentage changes across the important major currencies. A dynamic heat map showing these surges and dips would be an invaluable resource to gauge market sentiment and formulate effective trading strategies. Usually the data/information is one way investors get a feel for relative strength among the various currency pairs.
Looking forward, top analysts advise keeping a close eye on technical indicators. They further highlight the need for ongoing monitoring of macroeconomic trends, which is critical for anyone looking to trade AUD/USD currency pair. How the balance between these two factors plays out will no doubt determine how the market behaves in the days ahead.