Australian Dollar Range Expectations

The Australian Dollar (AUD) is expected to move between 0.6470 and 0.6515 in the short term. For a longer period, it should trade more widely between 0.6445 and 0.6555, based on insights from UOB Group’s FX analysts. In the last 24 hours, the AUD experienced some upward movement, almost reaching 0.6530, but then fell to 0.6473. There wasn’t much momentum for further decline, so it is likely to trade between 0.6470 and 0.6515. This suggests limited further decreases. Looking ahead one to three weeks, AUD’s trend has changed from negative to sideways. It’s expected to stay between 0.6445 and 0.6555, indicating a period of stabilization.

Derivative Trading Strategies

The FXStreet Insights Team gathers key insights from market experts. Their findings include notes and analyses from both internal and external sources. With the AUD expected to trade sideways, there seems to be limited momentum in the coming weeks. It should remain within the broader range of 0.6445 to 0.6555, with a tighter range between 0.6470 and 0.6515. This suggests that sudden price movements are unlikely without major economic news. This outlook is supported by central banks on both ends maintaining a steady approach. The Reserve Bank of Australia has kept its cash rate steady at 3.85% for four months. Recent U.S. inflation data, showing a 2.9% rise for September, provides the Federal Reserve with room to hold off on further tightening. With both banks focusing on data and showing neutrality, key currency movements are currently subdued. For derivative traders, this environment favors strategies that benefit from low volatility and time decay. Selling options seems to be the most sensible plan. For example, an iron condor strategy allows traders to limit risk while earning premiums as long as the AUD/USD pair stays within a set range. Traders could sell a November 2025 put option with a strike around 0.6400 and a call option with a strike near 0.6600. To limit potential losses, they might also buy a further out-of-the-money put below 0.6400 and a call above 0.6600. This setup aims for maximum profit if the currency stays between the sold strike prices at expiration. We saw a similar trend in 2019 when the AUD/USD remained stable for several quarters before the global volatility surge in 2020. During that time, range-bound option strategies outperformed directional bets. History shows that these calm periods can last longer than expected, benefiting those who prepare for stability. The main risk to this outlook would be an unexpected inflation report from either Australia or the U.S. Such news could prompt a central bank to change its policy stance. Traders should keep a close watch on the upcoming Australian quarterly CPI and the next U.S. Core PCE Price Index release. Any significant deviation could quickly disrupt the expectation of a stable range. Create your live VT Markets account and start trading now.

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