US Dollar Weakness Bolsters AUD/USD

Quick Look:

• AUD/USD traded between 0.6600 and 0.6685, closing at 0.6648, down 0.13%.
• Anticipated to remain between 0.6600 and 0.6685 with limited volatility.
• W formation and the Federal Reserve’s liquidity actions suggest potential upward momentum.
• Weakness in the US Dollar enhances the attractiveness of the Australian Dollar.

The AUD/USD currency pair, according to a recent analysis from UOB Group, has been trading within a specified range, with a minimum of 0.6600 and a maximum of 0.6685. Over the past 24 hours, the Australian Dollar experienced a dip to 0.6627 before rebounding to 0.6668. Despite this recovery, there was no significant momentum increase, indicating a lack of strong directional movement in the market.

The expectations for the short-term trading range were between 0.6625 and 0.6665. However, the actual observed range was slightly higher, from 0.6636 to 0.6673. The closing price settled at 0.6648, marking a slight decline of 0.13% from the previous day.

Mid-Term Range of AUD/USD Expected at 0.6600-0.6685

For the next one to three weeks, the AUD/USD pair is going to remain in a range-trading phase. The possible range for this period stands between 0.6600 and 0.6685, suggesting that there are no significant price movement expectations in the near term. Traders should prepare for a continuation of the current market behaviour, characterized by limited volatility and balanced pressures from both bulls and bears.

Bullish Factors Drive the AUD/USD Price

A broader market analysis highlights several factors influencing the AUD/USD pair, pointing towards a bullish trend. Notably, one pattern observed is the W formation, which is often considered a bullish indicator. This formation indicates potential upward momentum. Therefore, it can be a signal for traders to anticipate higher prices in the future.

Furthermore, key factors contributing to this bullish pressure include the Federal Reserve’s anticipated actions to inject liquidity into the market. Given its high sensitivity to global economic growth and commodity market trends, this liquidity injection will likely support the Australian Dollar. The increased liquidity in the market often results in a weaker US Dollar, thereby making the Australian Dollar more attractive to investors.

Key Levels: Support at 0.7250, Resistance Below 0.70

In terms of technical levels, the pullback support is identified at 0.7250, just below the 50-day Exponential Moving Average (EMA). This level is crucial as it acts as a buffer zone, providing support in the event of a market pullback. On the resistance side, significant shorting interest is noted below the 0.70 mark, indicating a psychological barrier for upward movement. Traders should be mindful of these levels as they can influence trading strategies and market sentiment.

The US Dollar has been on the back foot against several currencies, including the Australian Dollar. This broader weakness in the US Dollar further supports the bullish outlook for the AUD/USD pair, as a softer US Dollar typically enhances the attractiveness of other currencies. Investors should consider this broader trend when making trading decisions, as it impacts the relative strength of the AUD/USD pair.

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