**AUD/USD Technical Analysis: Aussie Dollar Gains Momentum on Improving Sentiment**
*Based on content originally by Adam Button for ForexLive, with additional analysis*
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The Australian dollar (AUD) advanced against the US dollar (USD) recently, with AUD/USD moving higher due to a combination of risk-on sentiment in global markets and technical factors playing out on the currency charts. This development brought renewed attention to trends in the pair and what may be coming next for traders and investors in the forex market.
**Market Context: What Prompted the AUD/USD Move Higher**
Several macroeconomic and market-specific influences contributed to the AUD/USD pair’s upward drive:
– **Risk Appetite Returns:** Recent sessions in global equity and commodity markets witnessed a rebound in risk sentiment, as investors shifted towards riskier assets, including the Australian dollar. This typically occurs during periods of optimism over growth or the resolution of global uncertainties.
– **US Dollar Weakness:** The US dollar index retreated, reflecting a general easing in safe-haven flows into the greenback. This outflow typically supports higher-yielding and commodity-linked currencies like the AUD.
– **Chinese Economic Support:** The Australian economy shares deep trade links with China, particularly in the commodity export sector. Any positive data or headlines out of China supporting economic growth can buoy the AUD.
**Technicals: Where the Key Levels Stand for AUD/USD**
The technical picture for AUD/USD helps traders identify zones of buying and selling interest, as well as momentum behind the move.
– **Resistance Levels:**
– *Initial Resistance*: The pair is approaching the 0.6616 zone, a near-term resistance that capped gains during previous sessions.
– *Further Upside Barrier*: Above this, the 200-day moving average around 0.6624 serves as a key test for the bulls. A daily close above this level could encourage additional buying.
– *Next Resistance*: Beyond the 200-day MA, the next horizontal resistance is at 0.6640.
– **Support Levels:**
– *Immediate Support*: Should the pair encounter selling pressure, look to the 0.6555 level as preliminary support.
– *Stronger Support*: Below, 0.6520 is an area where dip buyers may emerge, based on previous lows and technical pivots.
– **Momentum Indicators:**
– The recent upward move has pushed shorter-term momentum indicators like the Relative Strength Index (RSI) out of oversold territory, suggesting further gains are possible if buying persists.
– Price action is also occurring above several short-term moving averages, supporting a bullish near-term structure.
**Fundamental Factors Impacting AUD/USD**
The exchange rate between the Australian and US dollars is not solely a product of technical flows; underlying economic and policy dynamics drive movements over time.
– **Australian Data:**
– Recent employment and inflation releases from Australia have kept expectations for Reserve Bank of Australia (RBA) policy stable. Slight misses
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