AUD\/USD was on course to finish the week higher, up 0.21%, with the pair trading around 0.7124 and holding near Friday\u2019s highs. Price action pushed through the June 15 peak at 0.7088, which flipped into support after the break, before clearing 0.7100 and reaching a two-day high of 0.7136, then easing back to about 0.7120.<\/p>\n\n
Technically, the Relative Strength Index remains bearish but is close to turning higher, while markets are positioned for a Reserve Bank of Australia rate rise at the September 29 meeting. A move above this week\u2019s high at 0.7168 would open 0.7200, with further resistance seen at 0.7237 and then 0.7277; on the downside, a drop below the 50-day SMA at 0.7084 would bring the 100-day SMA at 0.7078 into view, followed by 0.7075 and the 200-day SMA at 0.7012. Beyond rates, AUD drivers cited include China\u2019s economic cycle, domestic inflation and trade balance, and iron ore, Australia\u2019s largest export at $118bn a year based on 2021 data.<\/p>\n\n
With the AUD\/USD currently hovering near 0.7124 after breaking the critical 0.7100 barrier, we recommend derivative traders lean into a bullish bias over the next two weeks. Buyers should consider structuring long call options or bull call spreads targeting the 0.7200 strike to capitalize on this upward momentum. This strategy allows us to capture the upside while limiting downside risk if the pair pulls back.<\/p>\n\n
The upcoming Reserve Bank of Australia rate decision on September 29 serves as a major fundamental catalyst for this trade. Historically, interest rate hikes support the domestic currency, and with Australia’s trade surplus recently holding strong at over 5.6 billion AUD, the fundamental backdrop remains highly supportive. Additionally, steady demand from global markets keeps the Aussie Dollar highly attractive to yield-seeking investors.<\/p>\n\n
To manage risk, we should place protective stop-losses on long futures positions just below the 50-day Simple Moving Average at 0.7084. A drop below the 100-day average of 0.7078 would signal a trend reversal and suggest we exit any bullish plays. However, if the market pushes past 0.7168, we can look to scale into larger positions toward the 0.7237 target.<\/p>\n\n
We must also watch the commodity space, particularly as iron ore prices have found solid support around $100 per metric ton this month. Stronger industrial demand from China, which recently saw its manufacturing PMI stabilize near 50.3, will likely keep buying pressure under the AUD. Utilizing short-term call options ahead of the late September volatility allows us to participate in this potential breakout with predefined risk.<\/p>\n\n\n\n