The Federal Reserve is the central bank for the United States and sets monetary policy in the country. Its dual mandate is to maintain low inflation and structural unemployment. As a result, it often intervenes in the market to promote price stability and support the economy. The Australian dollar appreciates when demand for commodities increases in Asia and falls when demand is lower. Hence, the movements in the AUDUSD are influenced by both sides. However, in recent years, the United States has resorted to quantitative easing, which may cause the Australian dollar to depreciate.
Traders may also want to avoid trading during range-bound market conditions and ride a trend. To identify a trend, use tools such as Simple Moving Average (SMA) lines or Bollinger Bands. For day trading in the AUD/USD currency pair, the busiest time is between 19:00 and 04:00 GMT. The late US trading session covers the midpoint of the Asia-Pacific session. News releases can trigger significant shifts, making it essential to identify important news and events.
The Australian dollar is a resource-driven economy that is highly dependent on global growth and commodity prices. Listed FX futures are an excellent choice for traders looking for precision in risk management. With monthly and quarterly futures, weekly options, and bespoke indicators, CME trading platforms provide the flexibility of choosing a flexible and reliable forex strategy. With CME, you can even access sophisticated live streaming charts. A live streaming chart allows you to see the currency’s movement in real-time and can be customized to your needs.
In the near term, AUDUSD has been consolidating below key resistance near 0.7600. If the support level is broken, the market will likely continue to fall. If this trend continues, AUDUSD is likely to break above the 0.382 Fibonacci level and move higher toward the 0.7800 mark. This could signal a cyclical downturn. However, the long-term price analysis shows that the market is likely to reach the 0.7800 target before the next reversal.
Australian dollar trading has been influenced by US-Australian trade relations. These two countries have a close relationship and are trusted trading partners. In fact, Australia receives US investments worth 860.9 billion. The AUUSD currency pair is among the most liquid currency pairings in the market and accounts for 6% of global transaction volume. The main influencers of the AUDUSD are banks and financial institutions. Besides these, commodity trading and money changers have a significant role in the currency market.
Australia’s economy has grown year after year since 2001. One of the obstacles it faced during the global financial crisis of 2008 was COVID-19. In addition, the currency’s base rate is influenced by the prices of key commodities. The slowdown in China’s economy has impacted key commodity prices. This can lead to substantial losses for traders. The Australian dollar is expected to strengthen, but its reversing trend is also a potential source of financial losses.
Other factors that affect the AUDUSD include the Reserve Bank of Australia’s monetary policy, which sets the short-term interest rate target. The Reserve Bank of Australia also issues monetary policy guidance on the first Tuesday of every month. Either statement can trigger significant fluctuations in AUD/USD. The Reserve Bank of Australia has a positive correlation with the S&P500 index in the US, which can affect the currency pair. Therefore, analysts recommend analyzing the latest economic data releases for AUDUSD.
The AUD/USD currency pair is one of the most commonly traded currency pairs in the world. It is the fourth most traded currency, but is not a member of the U.S. dollar index. Forex traders refer to it as an “Aussie,” and it is highly influential on commodities. You can buy or sell AUD/USD by reading the chart. You will see that one Australian dollar will buy you 0.75 U.S. dollars.
When the supply of Australian dollars exceeds the demand, a one-sided market occurs. When the supply of Australian dollars outnumbers demand, the Australian dollar depreciates quickly. Similarly, if the demand for the Australian dollar is increased, the Australian dollar will rise. This is why the Australian dollar has been following the global equity markets for a while now. Despite its rapid rise, the price of commodities is mainly driven by the demand for Australian dollars.
While the AUD/USD is a highly volatile pair, it is not difficult to profit from it. However, it’s essential to know the underlying economic forces that drive the AUD/USD market. By using technical analysis and a sound understanding of the underlying economic forces, you can successfully day trade the AUD/USD currency pair. And remember that a currency pair is only as good as its currency correlation. If one currency pair is doing well, it will impact all other currencies.