- The US dollar index goes back in the midst of the market nerves before the Federal Reserve Rate decision.
- US President Trump hints possible changes to the T-MEC, but there are still no specific commercial agreements, keeping market caution.
- The Australian dollar wins against the main currencies, including an increase of 0.40% against the US dollar.
The aud/USD pair remains resistant, despite a setback from the recent maximums. The Australian dollar (AUD) benefits from a weaker US dollar (USD), since market participants focus on the expected Federal Reserve Policy Meeting (FED) on Wednesday. Meanwhile, the commercial rhetoric around the Trump administration keeps the operators in tension, especially with President Donald Trump discussing possible changes to the United States-Canadá (T-MEC) agreement. However, no definitive updates on trade agreements have been provided, leaving uncertainty in global markets. The Australian dollar is also supported by its moderate recovery in the context of China’s stable economic activity.
Daily summary of market movements: US dollar to the defensive before the Fed meeting
- Asian currencies see strong profits while markets evaluate the possible spill effect of the strength of the Taiwan dollar.
- The US dollar index (DXY) is under pressure, falling to 99.30 while investors expect the decision of the Federal Open Market Committee (FOMC).
- The early meeting could provide clues about possible rates cuts later in the year.
- Meanwhile, global currency markets are reacting to commercial uncertainties, particularly in Asia, where Taiwan dollar increases is affecting broader regional currencies. Investors are also attentive to any announcement related to the commercial negotiations of the Trump Administration, although there have been no details about completed agreements.
Technical Analysis: AUD/USD is still bullish with support indicators
The Aud/USD torque is showing an upward signal, quoting 0.6500, with an increase of 0.40% in the day, and placing itself near the upper end of its daily range from 0.6438 to 0.6498. The relative force index (RSI) is 63.48, pointing out a neutral momentum. The indicator of convergence/divergence of mobile socks (MACD) indicates a purchase signal, and the raw material channel index (CCI) reads 124.18, also suggesting a bullish bias. The average directional index (ADX) in 21.07 is neutral, indicating a balanced market. Key mobile socks reinforce the upward perspective: the 20 -day SMA (0.6372), the 100 -day SMA (0.6286) and the 200 -day SMA (0.6462) suggest purchase pressure. In addition, the EMA of 10 days (0.6422) and the SMA (0.6418) confirm even more the upward feeling. Support levels are identified at 0.6469, 0.6462 and 0.6422, providing a solid base for additional profits.
Faqs Australian dollar
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and commercial balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
