The Australian dollar has been on an upward trend against the US dollar, and according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, this trend is expected to continue. The strategists predict that AUD/USD will extend its current advance and surpass the 0.6800 resistance level in the near future.
The AUD/USD pair has been on an uptrend since October 2021, rising from a low of 0.7100 to a high of 0.8000 in early January 2022. The pair then retraced to the 0.7300 support level before resuming its upward movement. As of April 15, 2023, AUD/USD is trading at 0.6725, and UOB Group strategists believe that the pair will continue to rise beyond the 0.6800 hurdle.
Factors Driving AUD/USD Upswing
There are several factors driving the upward trend of AUD/USD. One of the key drivers is the strength of the Australian economy, which has been growing steadily in recent years. According to the Reserve Bank of Australia, the country’s economic growth is expected to reach 4.75% in 2023, up from 4.25% in 2022. This growth is being driven by strong consumer spending, a rebound in business investment, and a recovery in the housing market.
Another factor contributing to the AUD/USD upswing is the weakness of the US dollar. The US Federal Reserve has maintained a dovish monetary policy stance, keeping interest rates low to support the economic recovery from the COVID-19 pandemic. This has weakened the US dollar, making the Australian dollar more attractive to investors.
Technical Analysis of AUD/USD
From a technical perspective, the AUD/USD pair has broken through its 200-day moving average (MA) and is currently trading above the 50-day MA, indicating a bullish trend. The pair is also trading above its long-term trendline, which is another bullish signal.
In terms of support and resistance levels, the next resistance level for AUD/USD is at 0.6800, followed by 0.6850 and 0.6900. On the downside, the pair has support at 0.6700, followed by 0.6650 and 0.6600.
Conclusion
UOB Group strategists are optimistic about the future of AUD/USD, predicting that the pair will continue to rise beyond the 0.6800 resistance level in the near term. The strength of the Australian economy and the weakness of the US dollar are key drivers of this upward trend. From a technical perspective, the pair is currently in a bullish trend and has broken through key resistance levels. Traders and investors who are bullish on the AUD/USD pair may want to consider buying the pair or entering long positions.
