The AUD/USD currency pair is currently trading just above 0.6700 after bouncing back from a low of 0.6660. This recovery comes as political events have impacted the US Federal Reserve, causing the US Dollar to weaken against several major currencies, including the Australian Dollar. A report from the New York Times revealed a criminal investigation involving Federal Reserve Chair Jerome Powell. This situation raises questions about the Fed’s independence and affects confidence in the US Dollar as a major reserve currency.

Technical Indicators

The AUD/USD is now at 0.6711, showing bullish momentum. The Relative Strength Index (RSI) sits at 55, indicating a slight bullish trend, while the Moving Average Convergence Divergence (MACD) shows improving momentum as well. The pair encounters resistance near the 0.6730 level. If this resistance holds, the pair may slide back toward the 0.6660 level. However, if it breaks through, it could pave the way for a retest of last week’s high at 0.6770. The US Dollar has weakened against major currencies, with the Japanese Yen being the least affected. A heat map displaying percentage changes among major currencies illustrates these movements. The US Dollar faces notable pressure from the investigation into the Fed Chair. This political uncertainty is causing volatility and presents us with clear opportunities. A similar situation occurred in 2019 during past tensions with the Fed, leading to sharp, unpredictable swings in the currency markets.

Potential Trading Strategies

For the AUD/USD pair, we should keep an eye on the 0.6730 resistance level. If the price fails to break through here, it could reinforce a potential bearish head and shoulders pattern, making put options a good strategy to aim for a decline back to the 0.6660 support line. This approach prepares us for a quick reversal if the Dollar finds temporary support. On the other hand, if the Aussie dollar rises decisively above 0.6730, the bearish setup would be invalidated. This would indicate a stronger upward trend, suggesting a move toward call options or long futures contracts, with an initial target set at the recent high of 0.6770. This trade takes advantage of ongoing momentum against a weakening US Dollar. Market expectations have changed rapidly due to this news. The CME FedWatch Tool now indicates nearly a 50% chance of an interest rate cut in the next Fed meeting, up from just 20% last week. This swift adjustment provides clear evidence of the Dollar’s current decline. With a rising “sell America” sentiment, we should expect ongoing high volatility across all major USD pairs. The CBOE Volatility Index (VIX) has already climbed above 22, its highest level since the banking turmoil experienced in the third quarter of 2025. In this environment, strategies like straddles or strangles could effectively profit from significant price moves without needing to predict a specific direction. Create your live VT Markets account and start trading now.

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