The Australian Dollar (AUD) could test 0.6530, with major support at 0.6505 likely to hold. Analysts from UOB Group predict that the AUD will stay within a range of 0.6505 to 0.6610 in the long run. In the last 24 hours, the AUD reached a high of 0.6616 but then fell sharply. Predictions suggested it would trade between 0.6550 and 0.6605, but the actual move dropped to 0.6533. Despite this fall, there’s not much increase in downward momentum. The AUD may hit 0.6530, but a recovery is expected, with resistance at 0.6575 and 0.6595.

One To Three Week View

In the next 1-3 weeks, earlier observations indicated AUD strength with a target of 0.6630. However, falling below 0.6535 shows weaker upward momentum. The AUD is now expected to trade between 0.6505 and 0.6610, showing a shift from earlier predictions. After failing to maintain gains above 0.6600 earlier this week, the strong upward momentum of the Australian dollar has faded. The currency pair seems to be entering a consolidation phase, likely moving within the 0.6505 to 0.6610 range for the coming weeks. The breach of the 0.6535 support level confirms that immediate bullish pressure is no longer present.

Economic Data And Strategies

This change in momentum is backed by recent economic data. Last week, Australia’s quarterly CPI came in slightly lower than expected at 3.8%, which eases pressure on the Reserve Bank of Australia to raise rates again. Additionally, yesterday’s US jobless claims dropped to 215,000, indicating a strong labor market and maintaining a hawkish stance from the Federal Reserve. Given this expected range-bound activity, derivative traders should explore strategies that benefit from low volatility and time decay. Selling an options strangle or a defined-risk iron condor with strikes outside the 0.6505 to 0.6610 range may work well. This strategy takes advantage of the idea that the AUD/USD won’t make a major breakout for the time being. We’ve seen similar price patterns before, especially in mid-2023 when the pair traded sideways for months due to mixed central bank signals. During that period, volatility gradually decreased, rewarding premium sellers. The current setup appears to be following a similar trend, indicating that the new range might hold through November. The one-month implied volatility for the pair has already dropped from over 11% to around 9% this week, showing the market adjusting to a less directional environment. This decrease in volatility makes selling options premium more appealing right now. We believe that the key support at 0.6505 will hold for the time being, creating a solid base for these range-trading strategies. Create your live VT Markets account and start trading now.

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