**AUD/USD: Is It Too Late to Join the Rally?**
*Based on insights from “AUDUSD: Is It Too Late to Join the Rally?” by Giles Coghlan, ForexFactory.com, with additional context from broader forex market analysis.*
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## Introduction
The Australian dollar (AUD) has recently witnessed a strong rally against the US dollar (USD), surprising many traders and analysts. As AUD/USD surges, questions arise about the sustainability of this move and whether it’s prudent to enter new long positions at current elevated levels. This in-depth discussion reviews the technical and fundamental drivers of AUD/USD, current market positioning, and considerations for traders aiming to participate in the trend.
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## Recent AUD/USD Performance
The AUD/USD currency pair has gained significant momentum, rebounding from early-year lows and climbing to highs not seen for several months. Several factors contributed to the rally, including shifts in central bank policies, fluctuations in global risk sentiment, and changes in commodity prices. The pair’s ability to hold above key moving averages and break through resistance zones strengthened the technical outlook.
– **Bullish run:** AUD/USD rallied from levels below 0.6550 to approach the 0.6750 region.
– **Supportive factors:** The rally was driven by improved risk sentiment globally, relative strength in commodity-linked currencies, and expectations of divergent monetary policy paths between the Federal Reserve and the Reserve Bank of Australia (RBA).
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## Technical Analysis
### 1. Key Price Levels
– **Resistance:** The main area of resistance was found near 0.6775, corresponding to a prior swing high and psychological level.
– **Support:** The most immediate support is around 0.6670, with more robust backing near the 200-day moving average, roughly at 0.6600.
– **Trend Structure:** The pair remains above its 100-day and 200-day simple moving averages, affirming the present uptrend.
### 2. Price Action Considerations
– **Momentum indicators:** Relative Strength Index (RSI) readings reached overbought territory on some timeframes, often a sign to exercise caution with fresh long entries.
– **Volume and Participation:** The recent surge has seen increased trading volumes, a sign of broader market participation and potential confirmation of the move’s legitimacy.
### 3. Entry Points
– Many traders seek to “buy the dip” in an established uptrend rather than chase highs.
– Waiting for a retracement towards support zones (for example, 0.6670 or 0.6600) could offer better risk/reward setups than entering at elevated levels.
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## Fundamental Drivers
### 1. Australian Economy and the RBA
– **Interest rate differentials:** RBA has maintained a relatively neutral, data-dependent stance, while the Fed’s policy outlook has shifted more dovish.
– **Economic data:** Australian GDP has shown resilience, and employment figures remain steady, reinforcing a positive backdrop for
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