AUD\/USD slipped on Thursday as US Dollar demand outweighed support from stronger-than-expected Australian jobs figures, with the pair trading near 0.6966 and down 0.45% on the day. The Greenback firmed as the Middle East war boosted safe-haven flows, while higher Oil prices fed inflation concerns and reinforced expectations the Federal Reserve could still tighten policy. CME FedWatch pricing implies an 83% probability of a September rate rise, and the US Dollar Index (DXY) was around 101.45, a three-week high.<\/p>\n
Technically, the pair remained above the 21-day and 200-day Simple Moving Averages (SMAs) at 0.6948 and 0.6896, though it stayed below the 50-day SMA at 0.7028. The Relative Strength Index (RSI) sat near 47, just under the 50 neutral mark, while the Moving Average Convergence Divergence (MACD) was marginally positive, alongside a weakening green histogram. Resistance levels were cited at 0.7028, then 0.7100 and 0.7250, with support at 0.6948 and 0.6896; a break lower would open 0.6800.<\/p>\n
We advise derivative traders to prepare for a downward move in the AUD\/USD pair over the coming weeks as geopolitical risks continue to favor the greenback. Since the US Dollar Index recently rallied to a three-week high of 101.45, we should focus on protecting long assets by purchasing AUD\/USD put options. Our primary downside target for these short-term trades should be the immediate support level at 0.6948.<\/p>\n
Historical data shows that when energy supply fears push global oil prices up by over 10%, the Australian Dollar routinely underperforms safe-haven currencies despite strong domestic jobs data. Today, with oil-driven inflation fears rising, interest rate markets are pricing in a strong 83% chance of a Federal Reserve rate hike in September. Because of this, we believe selling call options above the 50-day moving average of 0.7028 offers a high-probability income-generating strategy.<\/p>\n
From a technical perspective, the Aussie’s momentum is drying up as the Relative Strength Index sits below the neutral line at 47. If the pair drops below its 200-day moving average at 0.6896, we expect a quick decline toward the 0.6800 mark. We recommend using bear put spreads to capture this potential downside while keeping trade costs low.<\/p>\n\n\n\n