- AUD/USD maintains upward momentum, surpassing key resistance levels.
- USD weakens further due to labor market concerns, boosting risk assets.
- Australia’s trade surplus expands to over A$6.0B in July, supporting AUD gains.
The AUD/USD pair continued its bullish trend as the US Dollar (USD) faced continued pressure from labor market uncertainties, allowing the AUD to climb above the 0.6700 level on Thursday.
Despite initial setbacks earlier in the week, the Australian Dollar remained resilient, supported by the critical 200-day SMA at 0.6615. However, concerns about China’s economic outlook and recent USD strength posed challenges to the AUD’s positive outlook.
The uptick in AUD/USD was driven by a recovery in copper and iron ore prices, although ongoing weakness in iron ore prices could limit further AUD gains due to its correlation with China’s economic performance.
The recent monetary policy decisions by the Reserve Bank of Australia (RBA) also contributed to the AUD’s upward trajectory. The RBA’s decision to maintain the OCR at 4.35% and the hawkish tone in the latest minutes hinted at potential rate hikes, further boosting confidence in the Aussie currency.
While RBA Governor Michelle Bullock reiterated a cautious approach towards inflation, market expectations of rate cuts in late 2024 remained high. However, the RBA is expected to be the last among G10 central banks to adjust rates, providing stability to the AUD.
Looking ahead, with anticipated rate cuts from the Federal Reserve (Fed) and a prolonged restrictive policy by the RBA, AUD/USD could see continued gains in the coming months. However, challenges from China’s slow economic recovery may cap the AUD’s potential upside.
On the technical side, further upside in AUD/USD could target key resistance levels at 0.6823 and 0.6871, while support levels are seen at 0.6685 and the critical 200-day SMA at 0.6615.
Overall, the AUD’s performance is influenced by a combination of global economic factors, monetary policies, and trade data. Understanding these dynamics can help investors make informed decisions to maximize profits in the financial markets.
AUD/USD Daily Chart
AUD/USD Short-Term Technical Outlook
Further upside potential in AUD/USD could target levels at 0.6823 and 0.6871, while downside pressure may test support at 0.6685 and the 200-day SMA at 0.6615. Understanding key technical levels can help investors navigate market fluctuations and make informed trading decisions.