The AUDUSD started with a small drop in the Asian session but stabilized at 0.6495, a key support and resistance level. Buyers stepped in, stopping the decline and pushing the pair above the 100-hour moving average. The upward movement continued toward the 200-hour moving average at 0.65339, near the lower edge of the resistance zone, which ranges from 0.6536 to 0.6542. The day’s high reached 0.6537 before resistance appeared, as sellers returned to cap further gains.

Breaking the Resistance Zone

For the pair to move toward the July high of 0.65947, buyers need to break through the 200-hour moving average and the resistance zone. Until then, the pair will remain in a stable range. Current support is at 0.6495, while resistance sits between 0.6534 and 0.6542. A break past these levels will likely set the direction for future sessions. Key levels to monitor are resistance at 0.6534–0.6542 and support at 0.6507 (100-hour MA) and 0.6495, linked to the recent swing level. According to Michalowski’s analysis, the current price action shows a standoff between mixed economic signals. In the US, inflation is cooling, with the annual CPI rate dropping to 3.3% in May. This suggests potential Federal Reserve rate cuts later this year. This fundamental pressure could push the pair higher, but the technical resistance remains strong.

Trade Strategy Insights

Traders expecting a breakout above the resistance zone should consider buying call options. This could be triggered by ongoing weak US economic data or hawkish comments from the Reserve Bank of Australia, which is facing a low unemployment rate of 4.0% as of May 2024. A clear break above 0.6542 would indicate that fundamental factors are overcoming technical barriers. On the other hand, a downturn in China’s economy poses a significant risk and might push the pair below support. China’s Producer Price Index has shown deflation for 20 months, signaling weak industrial demand that affects Australia’s export-driven economy. A drop below the 0.6495 support level might lead us to buy put options to hedge against or profit from further declines. As the pair is currently “stuck in a familiar range,” selling options premium through strategies like an iron condor could be effective. This strategy benefits from low volatility and time decay as long as the price stays between the critical support and resistance levels noted earlier. Historically, AUD/USD can stay in stagnation when US and Australian central bank policies are not diverging clearly. In the coming weeks, we’ll keep an eye on the next US inflation report and employment data for direction. Any surprises in these figures might provide the catalyst needed to break the current stalemate. Until a decisive move occurs, treat this as a range-trader’s market, respecting the defined levels. Create your live VT Markets account and start trading now.

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