The AUD/USD pair retreated sharply after reaching over a one-week high, touching the 0.6735-0.6740 region on Friday. The spot prices then continued to drop through the first half of the European session, hitting a fresh daily low of 0.6670 in the last hour.
The AUD/USD pair is a popular currency pair among traders, and its movement is influenced by several factors, including economic data releases, global market events, and geopolitical tensions.
One significant factor influencing the AUD/USD pair’s recent decline is the strengthening of the US dollar. The US dollar index (DXY), which measures the dollar’s strength against a basket of major currencies, has been on the rise. As the US dollar strengthens, the AUD/USD pair tends to weaken.
Moreover, the market sentiment towards the Australian dollar has also been negative due to the ongoing trade tensions between Australia and China. As Australia’s largest trading partner, China’s decision to impose trade restrictions on Australian goods has had a significant impact on the Australian economy, resulting in a decline in the Australian dollar’s value
Additionally, the Reserve Bank of Australia’s (RBA) monetary policy decisions and interest rate announcements can also impact the AUD/USD pair’s movement. The RBA’s decision to keep interest rates low to support the economy during the pandemic has put downward pressure on the Australian dollar.
What Traders Can Expect
Traders who are interested in trading the AUD/USD pair should pay attention to several factors that can influence the pair’s movement. One key factor to watch is the US dollar’s strength, as it can have a significant impact on the pair’s value.
Furthermore, traders should also monitor the economic data releases from both Australia and the US, as they can impact the pair’s movement. Economic data such as GDP, inflation, and employment figures can provide insights into the health of both economies and influence traders’ decision-making processes.
Finally, geopolitical tensions and global market events can also impact the AUD/USD pair’s movement. As the COVID-19 pandemic continues to spread worldwide, any negative news related to the pandemic can have a significant impact on global financial markets and, in turn, affect the AUD/USD pair.
In conclusion, the AUD/USD pair experienced a sharp decline after reaching a one-week high, with spot prices dropping to a fresh daily low. Traders should pay attention to several factors that can influence the pair’s movement, including the US dollar’s strength, economic data releases, and geopolitical tensions. By staying up-to-date on these factors, traders can make informed decisions when trading the AUD/USD pair.