The AUDUSD has been rising, hitting a new daily high and gaining 0.27%. Initially, the pair was just slightly stronger but has climbed to 0.6685, where it encounters a key trend line. This level aligns with the November 2024 highs between 0.6684 and 0.6694, creating a narrow resistance zone. If the pair pushes through this area, it could gain more upward momentum and strengthen the bullish outlook.

November 2024 Resistance Levels

In November 2024, swing highs ranged from 0.6684 to 0.6694, and the pair has reached a high of 0.6685 so far. We are closely monitoring the AUDUSD as it presses against the crucial 0.6690 resistance zone, which had previously stopped the market in November 2024. Whether the pair breaks through or faces rejection here will likely shape the market’s direction for the upcoming weeks. This is a key moment for the currency. For traders predicting a breakout, buying call options with a strike price just above 0.6700 could be a good strategy. This approach offers upside potential with defined risks if the pair manages to close above the November 2024 highs, signaling a significant shift towards bullish momentum.

Fundamental and Technical Analysis

We also need to consider the weaker fundamentals affecting the Australian dollar. Iron ore prices have fallen to around $105 per tonne, down from over $130 in early 2024. This drop weakens one of the currency’s foundations. Additionally, the Reserve Bank of Australia seems more likely to cut rates compared to the US Federal Reserve, creating a policy difference that benefits the US dollar. In this context, a contrarian strategy could involve selling call option spreads with a short strike above the 0.6694 resistance. This tactic could profit from the expectation that economic challenges will hinder a breakout, allowing traders to earn premium as the pair may stall. The narrow resistance band provides a clear boundary for managing this position. The mixed signals between the bullish technical outlook and cautious economic data suggest that implied volatility could rise. Traders should watch the options market for changes in pricing, as this could indicate which direction the broader market may be leaning. In this environment, strategies that can profit from a sudden move in either direction may be advantageous. Create your live VT Markets account and start trading now.

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