The AUD/USD currency pair has been under pressure recently as the US dollar has gained strength. Traders are keeping a close eye on the pair as it approaches the key target of 0.6650/20. In this article, we’ll take a closer look at what’s been driving the AUD/USD and what we can expect in the coming weeks.
Factors Affecting the AUD/USD
One of the main factors affecting the AUD/USD is the strength of the US dollar. The US dollar has been gaining strength as the US economy continues to perform well, and the Federal Reserve has indicated that it may raise interest rates in the near future. This has caused investors to shift their money into US dollars, which has put pressure on the AUD/USD.
Another factor affecting the AUD/USD is the ongoing trade tensions between the US and China. Australia is a major exporter to China, and any escalation in the trade war between the US and China could hurt Australia’s economy and its currency.
Additionally, the Reserve Bank of Australia (RBA) has kept interest rates low, which has made the Australian dollar less attractive to investors. The RBA has indicated that it may cut interest rates in the near future if economic conditions warrant it.
Technical Analysis of the AUD/USD
From a technical analysis standpoint, the AUD/USD has been in a downtrend since early 2018. The pair has been making lower highs and lower lows, which is a bearish sign. The next key support level is around 0.6650/20, which is a major psychological level.
If the AUD/USD breaks below this level, it could signal further downside momentum, with the next key support level around 0.6500. On the other hand, if the pair manages to hold above 0.6650/20 and starts to rebound, the next key resistance level is around 0.6800.
Trading the AUD/USD
For traders looking to trade the AUD/USD, there are several strategies to consider. One approach is to wait for the pair to break below 0.6650/20 and then enter a short position with a stop loss above the resistance level. This would give traders a good risk-reward ratio if the pair continues to move lower.
Another approach is to wait for the pair to rebound from 0.6650/20 and then enter a long position with a stop loss below the support level. This would give traders a good risk-reward ratio if the pair starts to move higher.
Conclusion
In conclusion, the AUD/USD currency pair is under pressure as the US dollar continues to gain strength. Traders are keeping a close eye on the pair as it approaches the key target of 0.6650/20. There are several factors affecting the pair, including the strength of the US dollar, trade tensions between the US and China, and the RBA’s interest rate policy. From a technical analysis standpoint, the pair is in a downtrend, and the next key support level is around 0.6650/20. Traders can consider several strategies to trade the pair, including shorting below the support level or going long on a rebound from the support level.
