The AUD\/USD pair rose by 0.35% to approximately 0.6710 due to the US Dollar’s weakness during the European session. This decline followed allegations against Fed Chair Jerome Powell regarding mismanaged renovation funds for the Fed’s Washington headquarters.<\/p>\n
Currently, the US Dollar Index trades 0.3% lower to near 98.80. Powell said these accusations aim to pressure a reduction in interest rates. Market participants anticipate the US CPI data and Australia\u2019s upcoming employment statistics.<\/p>\n
The AUD\/USD holds a bullish trend with prices above the 20-day EMA at 0.6681. A strong 14-day RSI at 59 supports this upward movement. Maintaining this momentum, the pair could aim for 0.6800, while a close below the EMA could trigger a pullback to 0.6618.<\/p>\n
The US Dollar is the world\u2019s most traded currency, partaking in 88% of global forex activities. The Fed influences its value through monetary policy, adjusting interest rates to ensure price stability and full employment. Quantitative easing typically devalues the USD, while quantitative tightening tends to bolster its value.<\/p>\n
The criminal charges against the Federal Reserve Chair are an unprecedented event, creating significant uncertainty around the central bank’s independence. We are seeing the US Dollar Index drop towards 98.80 because the market is beginning to price in the possibility of forced leadership changes or politically motivated rate cuts. This immediate weakness in the dollar is the dominant theme traders should focus on.<\/p>\n
This political turmoil is causing a spike in market volatility, which presents opportunities for options traders. The Cboe FX Volatility Index (FXVIX) has already jumped 12% today, its largest single-day move since the regional banking stress we witnessed in mid-2025. We should consider strategies like long straddles or strangles on major currency pairs to capitalize on expected price swings, regardless of the ultimate direction.<\/p>\n
Tomorrow’s US Consumer Price Index data for December is now even more critical. After core inflation remained stubbornly above 3.5% for much of the last quarter of 2025, a soft reading would fuel the narrative of Fed weakness and accelerate the dollar’s decline. Conversely, a high inflation number would create extreme conflict for the market, pitting high inflation against a politically compromised Fed.<\/p>\n
For the AUD\/USD pair specifically, the path of least resistance appears to be upward, targeting the 0.6800 level. We should consider buying call options or establishing bull call spreads to profit from this momentum while defining our risk. The 20-day EMA at 0.6681 serves as a key level of support to watch.<\/p>\n
The Australian employment data on Thursday could add more fuel to this move. The Reserve Bank of Australia has been signaling a hawkish stance, and a strong jobs report would reinforce that view, further strengthening the Aussie. A beat on expectations could easily push the AUD\/USD pair through the 0.6750 resistance level.<\/p>\n
Given the broad-based dollar weakness noted, we should also look beyond just the Aussie dollar. The British Pound is showing the most strength against the dollar today, and positions in GBP\/USD could offer even greater upside. In this environment, it is crucial to remain nimble and use options to strictly manage risk, as headline risks from Washington are extremely high.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD climbs amid USD weakness; bullish trend supported by strong RSI and 20-day EMA level.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-38876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=38876"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38876\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=38876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=38876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=38876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}