The Australian Dollar (AUD) has increased against the US Dollar (USD), hitting a weekly high of around 0.6480, which is up more than 1.20% on Friday. The AUD/USD pair is benefiting from a weaker US Dollar and steady risk sentiment, although it continues to trade within a narrow range. Resistance is expected around the 0.6500 mark because of a downward trendline. The Aussie is also supported by positive news in global trade, particularly an agreement between China and the US to maintain open communication. Recent price movements have formed a bullish pennant pattern, suggesting a continuation after significant gains following a rebound from April’s low close to 0.5900. Price movements remain cautious, as buyers are hesitant to make new investments.

Support Levels and Momentum Indicators

Key support levels include 0.6400, which aligns with the 21-day EMA at 0.6414, indicating that buyers are still in control. If the price breaks above the pennant’s upper boundary near 0.6480–0.6500, it might move towards 0.6550, a level not seen since November 2024. Momentum indicators suggest continued gains, with the RSI at 57.3, above the neutral 50, and a positive MACD signal. Overall, staying above the 21-day EMA supports a bullish outlook, and breaking past 0.6500 could lead to further gains towards 0.6550. However, falling below 0.6400 could jeopardize this positive momentum. Currently, the AUD/USD pair is slightly unstable—testing familiar levels but not yet committing to a stronger breakout. The price action around the 0.6480–0.6500 area has stalled several times, which may cause traders to wait before making new directional bets until there is more clarity. If the price decisively breaks above this level, it could signal a continuation of the upward trend. Any rejection at that threshold might lead to a short-term reversal. We believe support near 0.6400 is likely to hold for now. This is not only backed by the historically reactive 21-day EMA but also by bears’ inability to push past this point in recent sessions. Momentum signals remain positive, with the RSI above the midpoint, indicating some underlying confidence. With the MACD also supportive, short-term dips may still be viewed as buying opportunities, as long as 0.6400 holds.

Market Context and Positioning

However, the compression within the pennant makes the situation delicate. This pattern usually concludes with a continuation—most often. A daily close above 0.6500 would confirm this expectation and make 0.6550 a target, a level we haven’t traded at since last November. This could attract short-term traders who have been waiting for a strong setup. The broader market context is perhaps more telling than the pair’s current numbers. The weakening of the greenback has boosted the AUD by default. Additionally, improved trade relations between Beijing and Washington reduce pressure on Asia-Pacific currencies, easing the need for passive hedging, thus making the AUD less restricted. If new buying interest does not emerge near the 0.6450–0.6500 area, the risk may shift towards retesting 0.6400. A sustained break below this level—especially if we lose EMA support—could disrupt short-term bullish trends, leading traders to lower their exposure or shift their focus to other pairs with clearer risk/reward profiles. Right now, levels above 0.6480 serve not only as resistance but also as tests of traders’ intent. If that threshold remains unbroken for most of the upcoming week, it could raise doubts about the strength of the anticipated continuation. Any weakening in momentum indicators, like the RSI dropping below 50 or the MACD flattening, should be monitored closely—not as clear warnings but as signs that conviction might be fading. In terms of positioning, movements near the top of the range may require less urgency. If the AUD breaks above 0.6500 with strong volume and closes above that level, it signals renewed momentum that could prompt traders to reassess their strategies. Until then, it may be wise for traders to temper their expectations for significant upward moves while the pair remains stuck below this resistance line. Create your live VT Markets account and start trading now.

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