The Australian Dollar (AUD) is close to being overbought but might still reach the 0.6570 level before a possible pullback. Recent trends indicate it could rise to 0.6575, provided the strong support at 0.6500 holds. In the short term, the AUD peaked at 0.6563, exceeding previous expectations. While it could test 0.6570, reaching 0.6600 today seems unlikely. The support levels are at 0.6535 and 0.6520.

Recent Performance and Future Projections

In the past one to three weeks, the AUD went above the 0.6555 resistance, closing at 0.6545. With current momentum, it may reach 0.6575 as long as the 0.6500 support remains secure. If it goes past 0.6570, the next target will be 0.6600. The Australian dollar is rising but is close to being overbought. This presents a chance to consider buying call options with a strike price near 0.6575, as long as it stays above the strong support of 0.6500. The upward movement is backed by Australian inflation data from August 6, 2025, showing a drop to 3.1%. Additionally, the US jobs report for July 2025 was a bit disappointing, putting pressure on the US dollar. Both factors create a positive environment for the AUD to continue its ascent.

Trading Strategies and Risk Management

For derivative traders, we should look for positions that benefit from a small upward move. A bull call spread—buying a 0.6550 call and selling a 0.6575 call—could effectively take advantage of this potential rise while managing risks. This strategy is suitable if we think the rally will likely pause around that higher target. We need to keep an eye on the 0.6500 support level. If it breaks below this level, it could undermine our entire bullish view. If the price drops below the minor supports at 0.6535 and 0.6520, we should be more cautious. A clear move below 0.6500 would indicate that the upward trend has failed. This situation reminds us of mid-2023 when uncertainty surrounding central bank policies led to brief but sharp AUD/USD rallies. Historically, the 0.6600 level has been a psychological barrier, evident in several failed tests in late 2024. This suggests we should consider taking profits near our targets rather than waiting for a significant breakout. Strong commodity prices also support this outlook. For instance, iron ore futures have risen 4% in the last thirty days, now trading at $115 per tonne. This provides a fundamental reason for the Aussie dollar to maintain its strength, at least until the next major economic announcement. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now