The AUD/USD has increased after surpassing the 200-day moving average and breaking a long-term descending trend line. The pair is moving towards a resistance zone of 0.6685-0.6710.
If there is a short-term decline, the area near 0.6410 would serve as support. Surpassing the 0.6685-0.6710 zone could lead to further upward movement towards 0.6800, and potentially reaching 0.6870-0.6940, levels seen in June 2023 and projected for 2024.
Bullish Momentum Confirmation
The AUD/USD has extended its move up after clearing a descending trend line that has been in place since 2021. We have also crossed the 200-day moving average, confirming the bullish momentum. The pair is now targeting the resistance zone from September’s high near 0.6685/0.6710.
This technical strength is underpinned by fundamental factors, as Australia’s third-quarter 2025 inflation report came in higher than expected at 3.2%, keeping pressure on the RBA. In contrast, the latest U.S. non-farm payrolls data from November 2025 showed a cooling labor market, increasing bets that the Federal Reserve will consider rate cuts in 2026. This policy divergence strongly favors a higher Australian dollar.
Given this outlook, we are considering buying call options with strike prices just above the 0.6710 level to profit from a potential breakout. A break of this resistance could see a rapid move towards the next projection at 0.6800. The relatively low options volatility we saw through November 2025 makes this an attractive strategy.
Strategic Entry Considerations
Should this resistance at 0.6710 hold, a short-term pullback could offer a better entry point, with key support identified near the recent low of 0.6410. A cautious approach could involve using bull call spreads to limit the initial cost and define risk. This would involve buying a call option and simultaneously selling another call at a higher strike price, such as the 0.6870 level which marked a high back in June 2023.
Further confidence in this upward trend comes from the recent strength in commodity markets, with iron ore prices up nearly 10% since October on stronger demand forecasts. We saw a similar dynamic in late 2020, where a breakout in the Aussie dollar followed a sharp recovery in commodity prices. If that historical pattern repeats, the current rally could extend towards the highs seen in mid-2024 near 0.6940.
