**AUD/USD: Renewed Risk Appetite Lifts Australian Dollar to Two-Week High**
*Based on original analysis by Mark Panga, Action Forex, with additional market insights.*
## Introduction
The Australian dollar (AUD) has shown a notable uptick against the US dollar (USD), climbing to its highest value in two weeks, propelled by renewed risk appetite among investors and a weakening greenback. This movement reflects wider shifts in global markets, changing economic outlooks, and a complex interplay of domestic and international factors. The AUD/USD currency pair is closely watched as a bellwether for sentiment toward growth-sensitive currencies tied to commodity exports. In this comprehensive analysis, we explore the drivers behind the AUD’s recent gains, delve into technical and fundamental analysis, and discuss the broader implications for traders and economic-watchers alike.
## Overview of Recent AUD/USD Movement
– The AUD/USD pair reached 0.6670, not seen in over two weeks.
– This rally began as risk-on mood swept across global markets, especially after softer-than-expected economic indicators from the United States weakened the USD.
– Australia’s economic data and positive market sentiment further fueled the uptrend.
## Key Drivers of AUD/USD Rally
### 1. Weakening US Dollar
Several factors contributed to the USD’s recent weakness:
– US retail sales for May came in below expectations, raising concerns about the sustainability of US economic growth.
– The Federal Reserve’s recent decision to maintain interest rates, combined with a cautious tone about future hikes, has curtailed support for the USD.
– Dovish comments from Fed officials have signaled to markets that a rate cut may be on the horizon if inflation continues to moderate and labor market loosens further.
### 2. Strengthening Risk Appetite
– Investor sentiment shifted towards risk-on assets as equity markets regained momentum.
– Emerging market currencies and higher-yielding assets like the Australian dollar benefited from this shift.
– Increasing optimism about a soft landing for the global economy made risk-sensitive currencies more attractive.
### 3. Robust Commodity Prices
– As a primary exporter of commodities such as iron ore and coal, Australia’s export revenues have remained resilient.
– Stronger prices and demand from China, its largest trading partner, have added positive pressure on the AUD.
– This correlation bolstered trader confidence in the AUD/USD, further supporting the current momentum.
## Technical Analysis: Can AUD/USD Sustain the Rally?
### Price Structure
– The AUD/USD has broken above a key resistance zone at 0.6650, moving firmly into bullish territory.
– Momentum indicators such as the Relative Strength Index (RSI) are hovering above 60, indicating strong buying pressure.
– Moving averages (MA) on the four-hour and daily charts support the uptrend:
– 20-period MA: recently crossed above the 50-period MA.
– 200-period MA: price action sits comfortably above, reinforcing the bullish technical perspective.
### Key Levels to Watch
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