Introduction:
The AUD/USD pair has been experiencing a rough time as it struggles to capitalize on its modest intraday uptick. Despite trading above the daily low through the first half of the European session, spot prices are currently experiencing a mild negative bias. This article will delve into the reasons behind the AUD/USD pair’s struggles and what traders can expect moving forward.
Reasons behind the AUD/USD Pair’s Struggles:
The primary reason behind the AUD/USD pair’s struggles is the strengthening of the US dollar. The US dollar has been gaining strength due to positive economic data coming out of the United States, particularly regarding employment and GDP growth. This has caused investors to flock towards the US dollar as a safe haven currency, causing other currencies such as the Australian dollar to weaken in comparison.
Another reason behind the AUD/USD pair’s struggles is the ongoing US-China trade war. As Australia relies heavily on trade with China, any negative news regarding the trade war can have a detrimental effect on the Australian dollar. The recent escalation of tensions between the US and China has caused many investors to become wary of investing in the Australian dollar, causing it to weaken further.
What Traders Can Expect Moving Forward:
Moving forward, traders can expect the AUD/USD pair to continue struggling in the short-term. The US dollar is likely to continue gaining strength as positive economic data keeps coming out of the United States. Additionally, any negative news regarding the US-China trade war could cause the Australian dollar to weaken even further.
However, in the long-term, things may start to look up for the AUD/USD pair. As the US-China trade war eventually comes to an end, and economic conditions stabilize, the Australian dollar may start to regain some of its lost value. Additionally, if the Reserve Bank of Australia decides to increase interest rates, it could cause the Australian dollar to strengthen in comparison to the US dollar.
Conclusion:
In conclusion, the AUD/USD pair is experiencing a mild negative bias as it struggles to capitalize on its modest intraday uptick. The primary reasons behind this struggle are the strengthening of the US dollar and the ongoing US-China trade war. Traders can expect the AUD/USD pair to continue struggling in the short-term but may see some improvement in the long-term. As always, traders should exercise caution and keep a close eye on any new developments that could affect the AUD/USD pair’s performance.
