AUD/USD Price Forecast: Attracts significant bids near 20-day EMA
The AUD/USD pair trades 0.35% higher to near 0.6710 during the European trading session on Monday.
  • AUD/USD jumps higher to near 0.6710 amid significant weakness in the US Dollar.
  • US prosecutors alleged Fed’s Powell for cost overruns in Washington headquarters’ renovation.
  • Investors await the US CPI and the Australian employment data for December.

The AUD/USD pair trades 0.35% higher to near 0.6710 during the European trading session on Monday. The Aussie pair gains sharply as the US Dollar (USD) underperforms across the board, following criminal charges by United States (US) federal prosecutors on Federal Reserve (Fed) Chair Jerome Powell for mismanaging funds for renovation of the central bank’s Washington headquarters.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the British Pound.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.39% -0.40% 0.03% -0.25% -0.28% -0.37% -0.38%
EUR 0.39% -0.02% 0.41% 0.14% 0.11% 0.01% 0.00%
GBP 0.40% 0.02% 0.43% 0.16% 0.14% 0.03% 0.02%
JPY -0.03% -0.41% -0.43% -0.28% -0.31% -0.40% -0.41%
CAD 0.25% -0.14% -0.16% 0.28% -0.03% -0.12% -0.13%
AUD 0.28% -0.11% -0.14% 0.31% 0.03% -0.10% -0.11%
NZD 0.37% -0.01% -0.03% 0.40% 0.12% 0.10% -0.01%
CHF 0.38% -0.00% -0.02% 0.41% 0.13% 0.11% 0.01%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.3% lower to near 98.80.

In response to criminal charges, Fed’s Powell has stated that cost overrun-accusations is a pretext to pressure him to cut interest rates.

On the economic front, investors await the US Consumer Price Index (CPI) data for December, which will be published on Tuesday.

Meanwhile, the Australian Dollar (AUD) trades higher while investors await the employment data for December, scheduled for Thursday.

AUD/USD technical analysis

AUD/USD trades higher at around 0.6708 during the press time. The 20-day Exponential Moving Average (EMA) rises, and the price holds above it, sustaining a bullish bias. The slope of the average has firmed in recent sessions, reflecting steady demand.

The 14-day Relative Strength Index (RSI) at 59 (above the midline) supports positive momentum. Initial support stands at the rising 20-day EMA at 0.6681.

As long as the pair respects the ascending average, dips would remain contained, and the trend could extend further towards the round-level figure of 0.6800. On the contrary, a daily close below this gauge would undermine the positive setup and open room for a deeper pullback towards the October 29 high of 0.6618.

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

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