Support and Resistance Levels

Immediate support is around 0.6480. If this level breaks, the next support is at 0.6450. Moving below here could push the price down to 0.6415 and lower. On the upside, resistance is near 0.6535. A breakthrough at this level could change the outlook to neutral and aim for 0.6600. The value of the Australian Dollar (AUD) is affected by several factors: the Reserve Bank of Australia’s interest rates, iron ore prices, China’s economic health, inflation, growth rates, and trade balance. Higher interest rates and a positive trade balance strengthen the AUD. Additionally, a healthy Chinese economy boosts demand for the currency, while rising iron ore prices benefit the AUD’s value. Currently, the AUD/USD is trading within a narrow range, indicating limited movement in the near term. The price is mostly fluctuating between 0.6480 and 0.6520, showing a clear bearish trend. In this scenario, selling during price rallies may be a wiser choice than buying during dips in the coming weeks. The pair is persistently below its 50-day and 100-day simple moving averages, which often serve as resistance levels. For options traders, the area around 0.6535-0.6560 may be attractive for selling call spreads. This strategy takes advantage of the expectation that the price will not break higher. This bearish view is backed by the fundamentals. The Reserve Bank of Australia has maintained its cash rate at 4.35% for most of the past year. In contrast, the US Federal Reserve’s stronger monetary policy has kept the US Dollar Index robust, recently trading above the 104 level. The difference in interest rates continues to favor the US dollar over the Aussie dollar.

Monitoring Key Indicators

Additionally, demand from Australia’s largest trading partner is currently not providing strong support. Recent economic data from China indicated that industrial production is growing at a modest 4.5% year-over-year, while iron ore prices have remained steady around $135 a tonne, failing to trigger a currency rally. These elements are eliminating important potential supports for the Australian dollar. We are closely monitoring the 0.6480 support level, which could signal further decline. If the price breaks and closes below this mark on a daily basis, it could indicate a new bearish trend, potentially moving towards the 0.6450 level seen last week. Traders might see this as an opportunity to open new short positions or buy puts with lower strike prices. Create your live VT Markets account and start trading now.

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