- The AUD/USD forecast indicates a stronger Australian dollar as risk appetite improves.
- Trump announced a trade deal with Japan.
- Economies like the EU, Canada, Mexico, South Korea, and Brazil are still facing the risk of higher tariffs.
The AUD/USD forecast indicates a stronger Australian dollar as risk appetite improves following the US-Japan trade deal. Market participants are hopeful more countries will sign deals before the August 1 tariff deadline.
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The Australian dollar rallied after Trump announced a trade deal with Japan. The trade agreement leaves Japan with a 15% reciprocal tariff on its exports to the US. At the same time, Trump said Japan would invest $550 billion in the US.
The trade deal has saved Japan from facing a 25% higher tariff. At the same time, it has increased market optimism about ongoing trade talks. More trade deals reduce the risk of a global trade war that would hurt risk appetite. As a result, the risk-sensitive Australian dollar gains with each deal.
However, major economies like the EU, Canada, Mexico, South Korea, and Brazil are still facing the risk of higher tariffs come August 1. At the same time, some of these nations are prepared to retaliate if the tariffs are implemented. Therefore, there remains uncertainty about the global economy’s outlook, which will likely keep a lid on Australian gains.
AUD/USD key events today
Market participants are not anticipating high-impact releases from Australia or the US. Therefore, all focus will remain on trade developments.
AUD/USD technical forecast: Bulls gear up to challenge the 0.6590 range resistance
On the technical side, the AUD/USD price is approaching the 0.6590 range resistance zone. The price trades far above the 30-SMA, with the RSI in the overbought region, suggesting a solid bullish bias. However, since the price still trades within its range, it is in a bigger consolidation.
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AUD/USD has traded in a sideways move between the 0.6500 support and the 0.6590 resistance. Bears have attempted to break out of the range on several occasions, but with no success. In the most recent attempt, the price broke below the 0.6500 support. However, bulls swiftly returned to push the price back into the range.
Afterwards, they pushed above the 30-SMA and have maintained a sharp rally to the range resistance. A break above the resistance will strengthen the bullish bias.
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