The Australian Dollar (AUD) is likely to stay between 0.6555 and 0.6595 against the US Dollar (USD). Short-term momentum has slowed a bit, but there is still a chance to rise to 0.6645, even if it’s unlikely. Recently, the AUD was observing consolidation between 0.6570 and 0.6615. However, it dropped to 0.6552, closing at 0.6565, which is down by 0.39%. Current movements still reflect a range of 0.6555 to 0.6595.

Short-Term Momentum Drops

At the middle of last week, the outlook for the AUD was positive. However, momentum decreased after hitting 0.6625. If the AUD falls below the support level of 0.6545, reaching 0.6645 seems less likely, and our initial outlook remains unchanged. Market information is provided for informational purposes only and involves risks. It’s important to research thoroughly before making decisions. There is no guarantee that the information is accurate or up-to-date. Investing carries risks, including financial and emotional losses, which are the responsibility of the investor. This information doesn’t represent official policy or offer personalized recommendations or investment advice. Given the expected stability, this situation offers opportunities for strategies benefiting from low volatility and time decay. Options traders might think about selling premium through strategies like an iron condor based on the anticipated range of 0.6555 to 0.6595. This approach takes advantage of the weakened short-term momentum. Price stability is a result of conflicting monetary policies affecting the currency pair. The Reserve Bank of Australia is keeping rates at 4.35% and is worried about recent inflation data, like the annual CPI rising to 3.6% in April. Meanwhile, a strong US economy is preventing the Federal Reserve from signaling any upcoming rate cuts, which supports the USD.

Range-Bound Trading Conditions

Historically, when major central banks have differing yet persistent policies, currency pairs often trade within a range rather than showing strong trends. The implied volatility of the Australian Dollar has been low, reinforcing our belief that selling options is a good strategy right now. This environment favors patient traders. We should treat the 0.6545 support level as a critical benchmark for managing risk. A significant break below this point would invalidate our neutral view and indicate the end of the consolidation phase. In that case, we would exit premium-selling positions and consider buying puts to hedge against or profit from a potential downtrend. Create your live VT Markets account and start trading now.

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