AUD/USD Price Forecast: Rises as bulls eye 0.72 breakout
AUD/USD advances during the North American session, up by 0.70% as the Greenback edges lower while the US and Iran reach a deal to extend a ceasefire by 60 days, which includes the reopening of the Strait of Hormuz. The pair trades at 0.7167 after bouncing off daily lows near 0.7150.
  • AUD/USD remains capped by 20-day SMA near 0.7185.
  • RSI turns neutral-bullish, signaling buyers may regain control.
  • Break above 0.7200 exposes 0.7277 and 0.7300 resistance levels.

AUD/USD advances during the North American session, up by 0.70% as the Greenback edges lower while the US and Iran reach a deal to extend a ceasefire by 60 days, which includes the reopening of the Strait of Hormuz. The pair trades at 0.7167 after bouncing off daily lows near 0.7150.

AUD/USD Price Forecast: Technical outlook

Price action shows the AUD/USD is consolidating within a nearly 100-pip range, capped on the upside by the 20-day Simple Moving Average (SMA) at 0.7185 and on the downside by the 50-day SMA at 0.7098.

Momentum is neutral to bullish, as indicated by the Relative Strength Index (RSI), which could open the door to further upside.

If AUD/USD rises above the 20-day SMA, buyers could challenge the 0.7200 level. A breach of the latter will expose the May 6 daily high at 0.07277, followed by 0.7300.

Downwards, the AUD/USD could turn bearish below the 50-day SMA at 0.7098, clearing the path to reach the latest cycle low of 0.7079, the May 19 low. Below this are the next support levels, the 100-day SMA at 0.7033, followed by the 0.7000 psychological milestone.

AUD/USD Price Chart – Daily

AUD/USD daily chart

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

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