AUD/USD has been on an upward trend for the sixth consecutive day, hitting a three-week high near 0.6785 during early Monday in Europe. The Aussie pair has been prodding the 100-DMA hurdle, which is inside an upward-sloping trend channel comprising multiple levels marked since March. This article will explore the factors driving the upward trend of the AUD/USD pair and what to expect in the coming days.
Factors Driving the Upward Trend of AUD/USD
One of the key drivers of the upward trend of AUD/USD is the recent weakness of the US dollar. The greenback has been under pressure due to the dovish stance of the US Federal Reserve, which has signaled that it will keep interest rates low for the foreseeable future. This has boosted risk appetite in the markets, leading investors to flock to riskier assets like the Aussie dollar.
Another factor that has contributed to the upward trend of AUD/USD is the recovery in the Chinese economy. China is Australia’s largest trading partner, and as such, any improvement in its economic outlook is likely to benefit the Australian dollar. China’s economy has been recovering from the pandemic at a faster pace than most other countries, which has helped to support the demand for Australian exports.
Finally, the recent rise in commodity prices has also been a key driver of the upward trend of AUD/USD. Australia is a major exporter of commodities such as iron ore, coal, and natural gas. As the prices of these commodities rise, it boosts the Australian economy and leads to increased demand for the Aussie dollar.
What to Expect in the Coming Days
The outlook for AUD/USD in the coming days remains positive, as the factors driving its upward trend are still in play. However, there are some risks to this outlook that investors should be aware of. One of these risks is the possibility of a renewed downturn in the global economy, which could lead to a decrease in demand for riskier assets like the Australian dollar.
Another risk to the outlook for AUD/USD is the ongoing tensions between Australia and China. The two countries have been at odds over a number of issues, including trade and security, and this could potentially impact the demand for Australian exports to China.
Despite these risks, the overall outlook for AUD/USD remains positive, and investors are likely to continue to flock to the Aussie dollar as long as the factors driving its upward trend remain in play.
Conclusion
In conclusion, AUD/USD has been on an upward trend for the sixth consecutive day, hitting a three-week high near 0.6785 during early Monday in Europe. The key drivers of this upward trend include the recent weakness of the US dollar, the recovery in the Chinese economy, and the rise in commodity prices. While there are some risks to the outlook for AUD/USD, the overall outlook remains positive, and investors are likely to continue to flock to the Aussie dollar as long as the factors driving its upward trend remain in play.
