AUD/USD rebounded from recent weakness, swinging between 0.7100 and 0.7168 before trading near 0.7155. Over the past two sessions it ranged from 0.7117 to 0.7152, finishing at 0.7129, down 0.29%, then rose sharply at the latest open. The move has room to extend, but a clean break above 0.7175 is seen as unlikely; near-term support sits at 0.7145, followed by 0.7130, and prior guidance had centred on a 0.7120–0.7175 band.
Over a one-to-three week horizon, earlier downside pressure is described as fading, with the focus on resistance at 0.7180 as a marker that earlier weakness has stabilised. Current action is framed as range trading between 0.7100 and 0.7215. Longer-term charts still point to downside risk towards 0.6765 if the 0.6850/0.6870 area gives way.
Consolidation Phase and Trading Strategies
We see the Australian dollar’s recent rebound against the US dollar as a shift into a consolidation phase. The pair is likely to trade within a range of 0.7100 and 0.7215 in the coming weeks, as the previous downward momentum has faded. This suggests that strategies profiting from sideways movement and time decay will be most effective.
This view is supported by both the Reserve Bank of Australia and the US Federal Reserve signalling a pause on interest rate moves, keeping the Australian cash rate at 4.35% and the Fed Funds rate in a 5.25-5.50% range. Iron ore prices, a crucial driver for the Aussie, have also stabilized around $115 per tonne, removing a key source of downward pressure seen earlier in the year. The lack of a strong directional catalyst from either rates or commodities reinforces the idea of a contained market.
Volatility Selling and Support Levels
For derivative traders, this points towards selling volatility within the expected range. We believe selling out-of-the-money call options with strike prices above the strong resistance level of 0.7175 is a viable strategy. Similarly, selling put options near the 0.7100 support level could also be considered to collect premium.
Fundamental support for the currency comes from a tight domestic labor market, with Australia’s unemployment rate holding firm at 4.0%. However, we remain watchful of the major long-term support zone around 0.6850. A decisive break below that level would invalidate the range-bound thesis and signal a much deeper decline.
