The AUD/USD pair has bounced back strongly, hitting the upper 0.6400s after the US nonfarm payroll report. The US dollar’s strength is fading as many expect a Federal Reserve rate cut in September. In Australia, the final S&P Global Manufacturing PMI remained steady at 51.3 for July. Additionally, Producer Prices increased by 0.7% in Q2 and 3.4% from last year, which helps support the Australian dollar. From a technical perspective, resistance is at the 55-day SMA of 0.6504, with further hurdles at 0.6625 and 0.6687. On the other hand, support levels are at 0.6418 and the 200-day SMA at 0.6391. Interest rates set by the RBA significantly impact the Australian dollar. The price of iron ore and the economic health of China also play a role, with higher rates and a strong Chinese economy boosting the currency. The trade balance is another factor to consider. A positive trade balance supports the AUD, as high export demand over imports strengthens the currency. Navigating the fast-paced forex market comes with risks and leverage; thorough research is essential before making any trading decisions. Currently, the Australian dollar is gaining strength against a weaker US dollar. This shift is largely due to a disappointing US jobs report, leading many to believe the Federal Reserve may cut interest rates in September. This potential change in policy is driving the market today, August 1, 2025. On Australia’s side, the economy looks strong. Producer prices are rising, and manufacturing activity is stable. The Reserve Bank of Australia’s hawkish approach in late 2024 and the first half of this year stems from ongoing inflation, which supports a stronger Australian dollar. Positive news from commodity prices is also encouraging. For example, iron ore futures surged above $120 per tonne in late July, supported by recent data showing unexpected growth in China’s manufacturing sector. Considering these factors, we should focus on strategies that benefit from a rising AUD/USD, such as buying call options. The pair has successfully crossed a key long-term indicator at the 0.6391 level, suggesting that the upward momentum may continue in the coming weeks. We need to keep an eye on the 0.6504 level, as this is a crucial resistance point. If the price breaks and holds above it, we could see a faster rise toward the 0.6625 area. However, if the market reverses, we should reassess our positions around the 0.6400 mark. Looking ahead, the RBA’s interest rate decision on Tuesday, August 5th, is a significant upcoming event. We will also monitor US inflation reports closely, as they will be key in confirming expectations for a Fed rate cut. History shows that when central bank policies diverge, it often leads to strong trends in currency pairs.

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