- The AUD/USD goes back in the middle of a renewed demand for safe shelters before the time deadline of Trump tariffs.
- The Aud pressed for the expectations of RBA cuts, while the stable Fed policy supports the USD.
- The AUD/USD maintains a bullish structure, although the impulse fades near the wedge resistance.
The Australian dollar (AUD) weakened against the US dollar (USD) on Friday in the middle of a low volume negotiation session and a risk aversion tone before the tariff deadline of July 9 of US President Donald Trump.
At the time of writing, the AUD/USD is above 0.6550, with intradic losses of 0.30%.
The closure of US financial markets for Independence Day led to lighter negotiation volumes, resulting in a contained volatility and a more corrective tone in currency markets.
Adding to the bearish bias, the Australian commercial data were weaker than expected. The figures published on Thursday showed a 2.7% drop in May exports, resulting in a narrower commercial surplus.
A tone of risk aversion was visible on Friday before the deadline of tariffs of July 9 of President Trump.
Trump’s threat to impose tariffs from 10% to 70% to multiple countries and dictate commercial terms has revived global commercial fears, which has caused flows to safe shelters and pressed to risk -sensitive currencies.
At the same time, expectations are increasing that the Bank of the Australian Reserve (RBA) will continue to relax monetary policy.
According to a Reuters survey published on Friday, a strong majority of 31 of 37 economists expects the Central Bank to implement a third consecutive rate cut of 25 basic points on Tuesday. This would carry the official cash to 3.60%.
This anticipated movement reflects the response of the RBA to the moderation of inflation and a domestic economy in deceleration. Meanwhile, the Federal Reserve (FED) has maintained interest rates within the range of 4.25% to 4.50%, providing some support to the US dollar.
AUD/USD technical levels to observe
From a technical perspective, the AUD/USD remains within the limits of an ascending wedge pattern in the daily chart, a structure that often indicates a possible exhaustion of the trend. The recent price action has struggled to exceed the level of 0.6590, with multiple failed attempts to clear this barrier just below the key psychological resistance in 0.6600. This hesitation has led to a slight recoil, reflecting the indecision of the market as the bullish impulse begins to fade.
Despite the setback, the broader trend remains constructive. The pair continues to negotiate over the 50 -day exponential (EMA) mobile average, currently at 0.6471, and 200 days EMA in 0.6436. This highlights the underlying bullish structure and suggests that buyers still have control in the medium term.
Aud/USD Daily Graph
However, impulse indicators are beginning to show early signs of fatigue. The relative force index (RSI) has dropped to around 56, from previous maximums, indicating a weakening of the impulse while maintaining above the neutral level of 50. This suggests that the bullish bias remains intact, but the impulse is being softened.
A confirmed break over 0.6600 could trigger a new upward movement, potentially opening the door to the fibonacci setback of 78.6% of the fall from September to April at 0.6722.
At the bottom, a rejection at the current levels could lead to a deeper setback, with initial support seen at the 61.8% Fibonacci level about 0.6550. This could be followed by a stronger support near the 50% setback in 0.6428, which is closely aligned with the 200 days, adding to its technical importance.
Feeling Risk – Frequently Questions
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
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.
