The Australian Dollar (AUD) is predicted to trade between 0.6625 and 0.6655 against the US Dollar (USD). Recent data shows that while the AUD may gain more strength, reaching the next resistance level of 0.6685 is uncertain. In the last 24 hours, the AUD rose to 0.6649 and closed at 0.6639, marking a 0.46% gain. Initially, it was expected to trade between 0.6585 and 0.6625, but current momentum indicators show limited potential for further increases. The trading range is now likely to remain between 0.6625 and 0.6655.

Current Trends

Over the past one to three weeks, the AUD was expected to rise, with strong momentum potentially pushing it to 0.6650. Last Friday, it peaked at 0.6649. However, the current rally seems stretched, raising doubts about reaching 0.6685. If the AUD falls below 0.6590, it would signal reduced upward pressure. Previously, 0.6550 was considered ‘strong support’. With current upward momentum, the AUD/USD pair is likely to trade in a higher range of 0.6625 to 0.6655. While more strength is possible, momentum indicators are showing signs of slowing down, hinting that the recent rally may be losing energy. Traders should be cautious about pursuing higher levels without new factors driving the market. The recent strength of the Australian dollar is backed by solid local fundamentals. October’s inflation data for the third quarter showed a stubborn 3.8%, putting pressure on the Reserve Bank of Australia to maintain firm interest rates into 2026. Additionally, the November jobs report indicated the unemployment rate dropped back to 3.7%, supporting a hawkish stance from the central bank. Moreover, key commodity prices have also helped boost the AUD. For instance, iron ore futures have recently climbed above $135 per tonne, a level not consistently held since late 2024. This strength in Australia’s main export is a strong support for the currency.

Volatility and Strategic Considerations

However, the recent gains may be overstretched, and we could see volatility ahead. The pair is struggling to break through 0.6650, making call options here potentially costly. This situation is reminiscent of the sharp rally in late 2023, which was followed by a period of consolidation. For those anticipating the rally to slow, selling cash-secured puts with a strike price below the strong support level of 0.6590 could be a smart strategy to earn premium. A clear drop below 0.6590 would signal that upward momentum has weakened, allowing traders to consider buying puts or starting bear put spreads in preparation for a possible correction. Create your live VT Markets account and start trading now.

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