**AUD/USD: Assessing the Current Rally and Future Opportunities**
*Based on the article by Frankie Walls, Forex Factory. Additional insights included.*
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The AUD/USD pair has recently attracted plenty of attention as it rides a robust uptrend. After a notable breakout occurring at the end of April, traders are now questioning whether this is a fresh opportunity or if the move is already overextended. Let’s thoroughly analyze the recent moves of the AUD/USD, explore the fundamental and technical narratives at play, and discuss actionable strategies for both conservative and aggressive traders.
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### The Recent Rally: What’s Driving AUD/USD Higher?
Since late April, the Australian dollar (AUD) has posted impressive gains against the US dollar (USD). Several factors are influencing this dynamic, both from an Australian and a global perspective.
**Key Drivers Behind the AUD/USD Upsurge:**
– **Soft US Data:** Recent US economic releases have undershot expectations, pressuring the USD lower as investors reassess the Federal Reserve’s stance on rate hikes.
– **Risk Sentiment:** A general improvement in risk appetite has benefited higher-yielding currencies like the AUD.
– **China Rebound Hopes:** As Australia’s largest trade partner, optimism around China’s ongoing recovery efforts lend support to the Australian currency.
– **Commodity Prices:** The AUD is a commodity-linked currency. Strength in iron ore and base metals has underpinned the Australian dollar.
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### Technical Picture: Is It Too Late to Join?
AUD/USD has broken out of a broader consolidation, with price action showing sustained momentum. Here’s a look at the pair from a technical perspective:
**Key Technical Highlights:**
– **Breakout Confirmation:** The pair cleared critical resistance around 0.6625, confirming a bullish breakout from the trading range.
– **Moving Averages:** Price remains above 50- and 200-day moving averages, reinforcing buyer control.
– **Momentum:** Daily RSI readings suggest strong momentum, though there are nascent signs of overbought conditions.
– **Volume:** Increased volume on breakout days validates the underlying strength of the move.
**Updated Chart Levels (as of June 2024):**
– **Support:** 0.6625 (old resistance turned support), followed by 0.6550.
– **Short-Term Resistance:** 0.6700, then 0.6780 and 0.6820.
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### Fundamental Backdrop: What Should Traders Watch Now?
A sound trading decision balances technical signals with unfolding macro fundamentals. The following factors will likely determine whether the current AUD rally has more room to run.
#### US Dollar Factors:
– **Fed Policy Outlook:** Markets have dialed back expectations for more US rate hikes. Fed officials signaled a greater willingness to pause or slow tightening, pressuring yields and the dollar.
– **US Economic Data:** Mixed US jobs and retail sales numbers have put downward pressure on the USD.
– **US CPI Figures:** Any surprise spike or miss in
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