The Australian Dollar (AUD) is likely to fall and test the support level at 0.6555. Analysts say there is a growing chance that the AUD will drop below 0.6555, following a decline to a low of 0.6579. In the past 24 hours, the AUD reached a high of 0.6624 before it fell again. The downward trend is expected to continue, pushing the AUD lower. Resistance levels are seen at 0.6595 and 0.6610.

Australian Dollar Weakness

The outlook for the AUD was neutral before, but two days ago, analysts expected it to trade between 0.6555 and 0.6640. With the AUD dropping to a low of 0.6579 and closing lower, signs of a further decline are increasing. If the AUD breaks clearly below 0.6555, attention may turn to the low from late September, around 0.6520. This outlook provides valuable insights, compiled by the FXStreet Insights Team from various analysts. Given the growing downward momentum of the Australian Dollar, there is an opportunity to bet on a break below the 0.6555 support level. Buying AUD/USD put options with a strike price near 0.6550 could be a smart move while managing risk. This strategy is backed by Australia’s recent inflation data, which is at 3.1%—just below the central bank’s target—and raises the chances of a more dovish policy change. Gold prices have surged past $4,000 an ounce, indicating a strong move to safe-haven assets, driven by the ongoing US government shutdown. The VIX, a measure of market fear, has soared to over 35 this week, a level not seen since banking stress in early 2024. Traders may want to buy call options on gold to capitalize on this momentum, as uncertainty remains high.

Market Volatility and Safe Haven Assets

This risk-averse environment is surprisingly strengthening the US Dollar, even as we expect dovish comments from the upcoming Fed minutes. Looking back at the 35-day government shutdown from 2018-2019, the dollar acted as a prime safe-haven asset despite wider economic worries. This historical pattern suggests the dollar will stay strong as long as the shutdown continues. We are also witnessing considerable weakness in the Euro, which is testing the key level of 1.1600 against the dollar. This situation is not just about dollar strength; rising political instability in France has widened the gap between French and German 10-year bond yields by over 80 basis points. This signals that capital is fleeing from perceived political risks in Europe, which will likely continue to pressure the EUR/USD pair in the coming weeks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now