Introduction:
The AUD/USD pair has been seeing minor losses and tepid gains through the early European session. This article will delve into the reasons for this trend and analyze the current situation of the pair. The article will also provide readers with a better understanding of the technical and fundamental factors that are driving the AUD/USD pair in the current market.
Reasons for Tepid Gains/Minor Losses:
The AUD/USD pair is currently struggling to capitalize on its previous day’s positive move, as it remains below the technically significant 200-day Simple Moving Average (SMA). The pair is currently placed just above the 0.6700 round-figure mark, nearly unchanged for the day.
One of the primary reasons for the AUD/USD pair’s tepid gains and minor losses is the strength of the US Dollar. The Dollar Index, which measures the strength of the US Dollar against a basket of six major currencies, is currently trading near the 92.00 level. The US Dollar has been gaining strength due to the rising yields of US Treasury bonds, which have increased demand for the currency.
Another factor that is contributing to the AUD/USD pair’s struggles is the weakening Australian economy. The Australian economy has been hit hard by the COVID-19 pandemic, and its recovery has been slower than expected. This has resulted in a decline in demand for the Australian Dollar, which has put downward pressure on the AUD/USD pair.
Technical Analysis:
From a technical perspective, the AUD/USD pair is currently trading below the 200-day SMA, which is a strong resistance level. The 200-day SMA is currently placed at 0.6825, and if the pair manages to break above this level, it could signal a bullish trend reversal.
On the other hand, if the AUD/USD pair continues to trade below the 200-day SMA, it could indicate that the bearish trend is likely to continue, and the pair could test the support level at 0.6670.
Conclusion:
In conclusion, the AUD/USD pair is currently struggling to capitalize on its previous day’s positive move, as it remains below the technically significant 200-day SMA. The strength of the US Dollar and the weakening Australian economy are the primary reasons for the pair’s tepid gains and minor losses.
From a technical perspective, the AUD/USD pair is currently trading below the 200-day SMA, which is a strong resistance level. Whether the pair manages to break above this level or continues to trade below it will determine the future direction of the AUD/USD pair.
