- AUD/USD stops below 0.6600 while the bulls approach the resistance of the wedge.
- The Australian dollar benefits from the hard line inclination of the RBA, while the markets wait Clarity about when the Fed could start cutting rates.
- AUD/USD remains in a strong upward trend in the short term while prices pondered commercial risks against performance differentials.
The battle between the Australian dollar (AUD) and the US dollar (USD) persists on Friday, with the bundles at the Aud/USD torque continuing to press to break the next important level of resistance at 0.6600.
This psychologically significant level has become a key battlefield, keeping both bullies and bassists while the price action stagnates just below it. As the impulse stops, market participants are increasingly returning their attention to fundamental catalysts that could strengthen the upward case.
From a fundamental point of view, the Federal Reserve (FED) remains reluctant to cut short -term interest rates. However, the approach has changed whether the Fed will cut rates to when such movement could occur.
Meanwhile, the Bank of the Australian Reserve (RBA) remains committed to supporting the country’s economic resilience. On Tuesday, the RBA surprised the markets by maintaining the stable cash rate at 3.85%, a movement that was perceived as more aggressive than expected. Although the Central Bank did not rule out the possibility of future rate cuts, the markets responded positively to the decision.
Australia’s limited exposure to the tariff threats of US President Donald Trump, due to his modest commercial deficit with the United States, has also provided the Aud to a certain relative protection. With the political risks already incorporated, the technical factors are now offering more information about the current market behavior and why the price remains firm near this key resistance area.
AUD/USD stops below the psychological resistance at 0.6600
AUD/USD is currently being negotiated just below the level of psychological resistance of 0.6600. Prices are consolidating within an ascending wedge pattern that has been forming since the end of April. This level continues to limit the bullish impulse, with the price action respecting the upper limit of the wedge while maintaining higher minimums, a sign of persistent buying interest.
The support is reinforced with the fibonacci setback of 61.8% of the fall from September to April, located about 0.6550. Below that, the simple mobile average (SMA) of 50 days at 0.6486 and the 200 -day SMA at 0.6402 are offering additional support for the short -term movement.
AUD/USD DIARY GRAPH
On the positive side, a confirmed break above 0.6600 would open the door for a fibonacci setback test of 78.6% in 0.6722, with additional gains that could be directed to the maximum of October about 0.6942. However, the failure in breaking above the current levels could result in a setback towards 0.6500.
The Relative Force Index (RSI) is currently about 59, indicating an upward impulse without indicating overcompra conditions. This leaves room for a greater rise, although the pair may require a fundamental catalyst or a clear breakdown above the wedge resistance to gain short -term traction.
Australian dollar – frequent questions
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.
