AUD/USD traded near 0.6940 on Friday, with the US Dollar under pressure after softer-than-expected US labour market data on Thursday. The move was supported by firmer Australian PMI readings that pointed to a mild improvement in domestic activity, while expectations that the Federal Reserve may have less scope to keep policy restrictive for longer weighed on Treasury yields.
Australia’s S&P Global Composite PMI rose to 50.4 in June from 49.8, moving back above the 50 threshold, and the Services PMI increased to 50.5 from 49.9. In China, the RatingDog Services PMI eased to 54.1 from 54.4 but remained in expansion territory, a backdrop that can influence Australia’s export-linked sentiment. On a four-hour chart, the pair was at 0.6938, capped below the 100-period SMA near 0.6967, with the 20-period SMA around 0.6910 and RSI near 60. Resistance sits at 0.6945 then 0.6967, while support is seen at 0.6931, 0.6922 and 0.6912 ahead of 0.6910.
Opportunities From Divergence In Economic Data
Given the divergence in economic data, we believe the Australian Dollar’s strength against the US Dollar presents a clear opportunity. The latest US Non-Farm Payrolls report for June 2026 came in at just 155,000 jobs, well below the 200,000 consensus, reinforcing the view that the Federal Reserve will be pressured to ease policy. In contrast, Australia’s own economic resilience and sticky Q1 2026 inflation of 3.8% suggest the Reserve Bank of Australia has little room to cut rates.
We see a strong case for positioning for further AUD/USD upside in the coming weeks. Buying call options with a strike price just above the key resistance level of 0.6975 could offer significant leverage if the pair breaks out. This strategy allows us to profit from a move higher while strictly defining our maximum risk to the premium paid.
For a more conservative approach that reduces costs, we are considering bull call spreads. This would involve buying a call option at a lower strike price, like 0.6950, and simultaneously selling another call at a higher strike, such as 0.7000. This structure limits our potential profit but also lowers the initial cash outlay.
Managing Technical Barriers and Volatility
However, we must respect the technical resistance noted around 0.6967, which has capped previous rallies. If the pair fails to break this level, a pullback is likely, a scenario we have seen before during the range-bound trading of late 2024. Purchasing put options with a strike price below the 0.6910 support level would provide a hedge against a sharp reversal.
The conflicting signals between bullish fundamentals and stubborn technical resistance could increase volatility. With key US inflation data due next week, a long straddle or strangle could be an effective strategy. This would allow us to profit from a significant price move in either direction, capitalizing on the market’s current uncertainty.
