- Aud/USD weakens after reaching a fresh YTD height of 0.6564 on Thursday.
- US-Chin trade increases risk moods, but the acceptance of profits and stronger USD profits.
- Aud/USD is heading in the direction of 0.6500, and the stubborn rush disappears above 0.6550.
The Australian dollar (AUD) withdraws from weekly ups compared to the American dollar (USD) on Friday.
At the time of writing, the Aud/USD pair is located near 0.6520, after reaching a height of 0.6561.
Aud/USD retreat because USD regains the Earth and the sentiments stabilize
The American dollar slightly recovers after three -year minima in relation to its peers. On Friday, the Economic Analysis Office published the latest basic data on personal consumption (PCE). The basic numbers that reflect the tempo at which prices for goods are rising, excluding unstable items, such as food and energy, increased in May. The annual factor increased by 2.7%, higher than the previously estimated 2.6%, with the monthly number increased by 0.2 percentage point.
The preferred measure of the Federal Reserve inflation (FED) is strictly monitored for potential guidelines on the trajectory of monetary policy. However, when President Trump exerted pressure on the Fed to lower the rates before the September meeting, investors also looked at the numbers of Michigan mood indicators, which reflected a slight boost in optimism in June.
Despite the issue of macroeconomic data, facilitating geopolitical tensions this week was the main driving force of the Aud/USD price boost.
Along with the suspension of weapons between Israel and Iran, increasing the demand for risk assets, safe and sound flows-leds decreased, exerting additional pressure on the green. News about China and the United States finalization of the trade agreement on Friday provided additional support for Aud/USD, which willingly recognized the key level of psychological resistance of 0.6600.
Because the markets continued to digest the latest events and prepared for closing, an boost in the number of profits by a lower AUD/USD.
Technical rejection at a key level of fibonact
From a technical point of view, Aud/USD trades as part of the growing wedge pattern, a structure often associated with potential bear.
The couple tried to interrupt above 61.8% of the recovery of Fibonacci the September-April inheritance tank around 0.6550, but the momentum could not be maintained.
Daily Aud/USD chart
The rejection at this level caused a up-to-date wave of sales, with immediate support apparent currently on the 50-day interpretation average (EMA) near 0.6448. Below is a 200-day EMA at 0.6427, which break can reveal the lowest level on Monday of 0.6372.
Meanwhile, the relative force indicator (RSI) is 55 and indicates down, which indicates the disappearance of stubborn shoot. The close perspective of Aud/USD remains cautious. While the improved moods at the beginning of this week raised the pair, the inability to immaculate the key level of resistance and reborn demand for an American dollar can signal the potential of additional inheritance.
FAQ in American dollars
The American 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 in circulation with local notes. It is most often a commercial currency in the world, which is over 88% of all global currency turnover, i.e. an average of $ 6.6 trillion of transactions per day, according to the data from 2022. After the Second World War, USD took over from the British pound as the reserve currency of the world. For most of its history, the American dollar was supported by gold, up to the Bretton Woods agreement in 1971, when the golden standard disappeared.
The most crucial single factor affecting the value of the American dollar is the monetary policy, which is shaped by the Federal Reserve (FED). The Fed has two seats: achieving price stability (control inflation) and supporting full employment. Its main tool to achieve these two goals is to adjust interest rates. When the prices rise too quickly and inflation is above 2% of the Fed target, the FED will boost the rates, which helps USD values. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates that are weighing in the green area.
In extreme situations, the Federal Reserve can also print more dollars and introduce quantitative alleviation (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used in the event of a loan desiccated, because the banks will not borrow (for fear of the contractor). This is the last last, when just lowering interest rates is unlikely to achieve the necessary result. The weapon of choosing the Fed was a FED weapon to combat the credit crisis, which took place during the great financial crisis in 2008. This includes FED printing more dollars and using them to buy US government bonds mainly from financial institutions. QE usually leads to a weaker American dollar.
Quantitative twist (QT) is the opposite process in which the federal reserve stops buying bonds from financial institutions and does not reinvest from the bonds that it has in up-to-date purchases. This is usually positive for the American dollar.
