**Australian Dollar Price Forecast: Can AUD/USD Hold the Range?**
*By Daniel Dubrovsky, originally published on FXStreet*
**Overview**
The Australian Dollar (AUD) has been oscillating against the US Dollar (USD) in a well-defined range over recent weeks, reflecting a mix of global macroeconomic forces and local Australian developments. This article delves deep into the current technical and fundamental backdrop facing AUD/USD, explores prospects for the currency pair’s next significant move, and incorporates perspectives from additional industry commentary.
**Recent Price Action and Market Sentiment**
– AUD/USD has largely consolidated between 0.6580 and 0.6710, following a period of increased volatility earlier in the year.
– The range reflects markets looking for clarity on major catalysts, including central bank decisions, US economic data, and shifts in risk sentiment.
– While the pair saw some attempts at breakout moves, each foray beyond these boundaries has been swiftly reversed, signaling strong support and resistance zones.
**Key Drivers Impacting AUD/USD**
Many factors are currently influencing the direction of AUD/USD. Below is an overview:
1. **Monetary Policy Divergence**
– The Reserve Bank of Australia (RBA) has kept rates on hold amid sticky inflation but remains open to further tightening if necessary.
– The US Federal Reserve, after an aggressive tightening campaign, is signaling patience. Nonetheless, sticky US inflation could postpone anticipated rate cuts.
– Diverging expectations on the timing and scale of policy adjustments on both sides have kept traders oscillating between risk-on and risk-off stances for AUD/USD.
2. **Economic Data Releases**
– **Australia:**
– Labor market data remains robust, underpinning AUD.
– Inflation readings have stayed above the RBA’s comfort range, maintaining the window for a hawkish hold or even a future hike.
– Recent GDP figures have confirmed slower but not recessionary growth.
– **US:**
– Strong job creation and wage gains support the USD.
– Inflation remains above the 2 percent target, keeping a Fed pivot at bay.
– Mixed signals from manufacturing and service PMI data add to market uncertainty.
3. **Risk Sentiment**
– The Aussie is often viewed as a risk-sensitive currency due to Australia’s trade-linked economy, particularly with China.
– Elevated risk appetite has boosted AUD during periods of equity market optimism, while global jitters (such as geopolitical worries or US economic fears) trigger flows into USD.
4. **Commodities Prices**
– Metals and iron ore, key Australian exports, influence AUD demand.
– Recent softness in global commodity prices has limited AUD upside, despite some stabilization in China’s economy.
5. **Developments in China**
– China remains Australia’s largest trading partner, especially for raw materials.
– Any indication of a slowdown or stimulus from China can move AUD.
**Technical Analysis: Can AUD/USD Maintain the Current Range?**
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