The AUD/USD pair has surged to multi-day highs near 0.6580, defying the strength of the US Dollar. This upward momentum comes after the Chinese trade surplus narrowed more than expected in July, impacting commodity prices which remained on the defensive on Wednesday.
Despite the positive movement in the AUD/USD pair, it faces a critical resistance level at the 200-day SMA of 0.6593. Clearing this level convincingly is crucial for a bullish outlook.
The Australian Dollar has been supported by the recent hawkish stance of the Reserve Bank of Australia (RBA), signaling no immediate plans for rate cuts. This contrasts with potential easing by the Federal Reserve, which could provide further support for the AUD/USD pair in the near future.
However, concerns about the Chinese economy’s sluggish momentum and lack of stimulus measures could hinder the Australian Dollar’s recovery. Investors are closely monitoring developments in China, the world’s second-largest economy, for any impact on demand for Australian exports.
In terms of technical analysis, further gains in the AUD/USD pair could see it challenging key resistance levels at 0.6600 and 0.6641 before aiming for higher targets at 0.6798 and 0.6871. On the downside, a resurgence of bearish sentiment could lead to retests of the recent lows at 0.6347 and 0.6270.
Overall, the AUD/USD pair’s performance is influenced by a combination of factors including central bank policies, economic data releases, and global market trends. Investors should stay informed and monitor key levels to make informed decisions regarding their investments in this currency pair.