The AUD/USD pair has increased in value over the past 2 weeks mainly due to the devaluation of the US Dollar, as well as the change in government for Australia. The currency pair rose by 1.09% during today’s first two sessions and only witnessed one 0.50% retracement. The AUD/USD pair is now attempting to break to a “higher high''. Throughout the day, the Australian Dollar has seen stronger price movements against the US Dollar compared to the Euro, British Pound, and Japanese Yen.
The rise in energy and precious metal prices such as gold, silver, and oil has created stronger support for the AUD/USD pair while adding pressure on US Dollar.
Growing demand for the AUD has been triggered by speeches from the Assistant Governor of the RBA (Reserve Bank of Australia), who hinted at a gradual reduction in the department's balance sheet - an indication of a potentially more hawkish central bank. Another factor influencing the Australian currency is the change of government. After being sworn in as the Prime Minister, Mr Albanese promised to increase financial assistance to citizens and tackle the high inflation rate, specifically on the rising property market.
While these developments created support and increased demand for the Aussie Dollar, the US Dollar index declined and retreated from 13th May highs at 105.00 to trade at 102.13. However, the AUD is not seeing the same success against other currencies - it’s struggling against the New Zealand Dollar and the Euro.
The AUD/USD currency pair is likely to be influenced by the FOMC Meeting Minutes due on Wednesday evening and the Prelim GDP on Thursday. Traders are likely to place surer positions after clarification on the monetary policy and economy. In addition to this, the market will be closely monitoring the price of commodities such as oil and gold. Further increase in the energy prices may also further support the Australian Dollar.
According to the RSI and Stochastic Oscillator Indicators, the price is currently witnessing minor short term signals. However, it remains within a higher price swing and above the 10, 30 and 75-day moving averages.
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