The AUD/USD forex surrogate is bouncing back. Buyers have re-entered the market, spurred on by renewed hopes of possible stimulus measures from China. Cautious optimism Traders are both wary and optimistic. The duo has found strength on the back of a weak U.S. dollar and an obvious turn in risk sentiment.
During Tuesday Asia, the AUD/USD pair maintained its bullish trend. It found momentum after bouncing up from the 0.5930 level, which was its weakest point since March 2020. During Friday’s abbreviated trading session, the pair enjoyed a welcomed surge of bullish momentum. This dramatic increase indicates that the downward trend may finally be turning around. Investors are reacting favorably to the overall bullish outlook for risk assets. Their optimism is supported by hopes that the Chinese government will implement more economic stimulus measures.
The recent surge in interest on the AUD/USD pair is further supported by a strong key levels in its trading pattern. Furthermore, it has been persistently trading well above the 23.6% Fibonacci retracement level. This area matches up with its historical drop from near the 0.6400 level. This 38.2 % retracement level or fib level is a key one that traders watch pretty closely. If this momentum holds, they might be in for even bigger gains.
The pair has been recently trading well above the 0.6100 level. This line could attract new sellers as traders react to their positions and reassess. Traders are keeping a close eye on CBOE Volatility Index (VIX) market signals and inflation readings. Given all that’s still evolving in the global economy, they will particularly watch and test this upward movement.
Even with its recent upside, the AUD/USD pair remain challenged. At the moment, it is below the psychological 0.6000 level and below the short-term support levels at about 0.6025-0.6020. They could offer temporary support going forward yet still demonstrate the overall choppiness in today’s market backdrop. If the pair breaks down from the current level, it might tumble to retest lower support areas. Initial focus on 0.5820-0.5815 and then the intermediate support at 0.5755-0.5750.
On Monday, the Australian dollar tanked to a six year low of 0.5930. This huge decrease underscores the fundamental pressures the currency has experienced in recent weeks and months. FILE — Banknotes of the United States dollars are displayed in Washington, D.C., on May 1, 2019. Despite this positive development, worries over what future economic indicators may show can still rattle market confidence.
Traders continue to take a very hard look at their own strategy. They’re focused on important price levels that may determine the AUD/USD pair’s short-term direction. Beyond the 0.6100 threshold, watch for resistance near 0.6165. Retesting this level would bring us back to the 50% Fibonacci retracement level. If price can manage a sustained trade above this zone, we could see the technicals signaling additional bullish momentum for the Australian dollar, bullish AU-USD prospects.
The current climate suggests that while there is optimism surrounding potential stimulus measures from China, traders must navigate carefully amid fluctuating support levels and external economic pressures. How these factors play out will go a long way in shaping market direction and trader sentiment in the upcoming session.