**AUD/USD Price Forecast: Momentum Builds as Pair Holds Above 0.6600**
*Adapted from an article by Anil Panchal, FXStreet*
The Australian Dollar (AUD) has been showing renewed signs of strength against the US Dollar (USD), particularly as the AUD/USD currency pair maintains its position above the psychologically significant 0.6600 level. This consolidation above 0.6600 has sparked speculation among forex traders and investors regarding the short- to medium-term prospects for the Aussie dollar amid evolving economic and monetary policy landscapes both in Australia and the United States.
### Recent Performance and Technical Overview
In late December 2023, the AUD/USD pair attempted to break higher, finding solid support above the 0.6600 threshold. During the session on December 23, 2023, the pair traded in a relatively tight range, supported by a generally positive mood in risk assets across global financial markets. This sentiment was buoyed by strong performances in equities and commodities, which often benefit the Australian dollar due to the nation’s resource-dependent economy.
#### Key Technical Highlights
– **Support established**: AUD/USD held firm above 0.6600, which is seen as a critical support zone from both psychological and technical perspectives.
– **Resistance levels**:
– The immediate resistance appeared at 0.6680, a recent swing high.
– Further resistance lies near 0.6710, a level tested earlier in the month.
– **Technical indicators**:
– The Relative Strength Index (RSI) remained above 50, suggesting positive momentum and an absence of immediate overbought conditions.
– The 50-period Simple Moving Average (SMA) was trending upward on the four-hour chart, further underpinning bullish sentiment.
– **Chart patterns**:
– The price action has formed higher lows, another bullish sign, as buyers repeatedly entered above the 0.6600 mark.
– The pair has stayed above its short-term moving averages, giving further technical confirmation.
### Fundamental Drivers Impacting AUD/USD
The development in the AUD/USD exchange rate cannot be explained by technicals alone. Several fundamental factors are influencing traders’ decisions and price action. Some of the most important include:
#### 1. Diverging Monetary Policies
– **Federal Reserve (Fed)**: US monetary policy has been attracting significant attention, with the Federal Reserve shifting from an aggressive tightening phase toward a wait-and-see approach. Recent statements from Fed officials indicate a greater willingness to pause or even cut rates in 2024 if inflation continues to moderate.
– **Reserve Bank of Australia (RBA)**: The RBA has maintained a relatively more hawkish stance amid persistent domestic inflation. While the central bank raised rates less aggressively than the Fed this cycle, the expectation that Australian rates could remain high for longer is providing ongoing support to the Aussie dollar.
#### 2. Economic Performance
– **Australian Economy**:
– Recent economic data from Australia has
Read more on AUD/USD trading.