Insights 
VT 
The Australian Dollar (AUD) has potential to test 0.6530, with major support at 0.6505 unlikely to be threatened. In the longer term, AUD is projected to fluctuate within a range of 0.6505 to 0.6610, according to analysts from UOB Group.
In a 24-hour period, the AUD peaked at 0.6616 before dropping significantly. Earlier predictions anticipated a range-trading phase between 0.6550 and 0.6605, but actual movements showed a drop to 0.6533. Despite this decline, there’s minimal increase in downward momentum. The AUD may test 0.6530, though a recovery is expected, with resistance levels at 0.6575 and 0.6595.
One To Three Week View
In a 1-3 week view, previous observations suggested AUD strength with a target of 0.6630. However, breaking below 0.6535 showed diminishing upward momentum. Looking forward, the AUD is expected to trade between 0.6505 and 0.6610, reflecting a change in dynamics from initial forecasts.
The strong upward push in the Australian dollar has faded after it failed to hold gains above the 0.6600 level earlier this week. We now see the currency pair entering a consolidation phase, likely to trade within a 0.6505 to 0.6610 range for the next few weeks. The breach of the 0.6535 support level yesterday confirms that the immediate bullish pressure is gone.
Economic Data And Strategies
This shift in momentum is supported by recent economic data releases. Australia’s latest quarterly CPI figure, released last week, came in slightly below expectations at 3.8%, easing pressure on the Reserve Bank of Australia for another rate hike. Meanwhile, yesterday’s US jobless claims fell to 215,000, suggesting continued labor market strength and keeping the Federal Reserve on a hawkish path.
Given this expected range-bound activity, derivative traders should consider strategies that profit from low volatility and time decay. Selling an options strangle or a more defined-risk iron condor with strikes outside the anticipated 0.6505 to 0.6610 range could be an effective approach. This strategy capitalizes on the view that the AUD/USD will not make a significant breakout in either direction in the near term.
We have seen similar price action before, particularly during the middle of 2023, when the pair traded sideways for months as markets weighed conflicting central bank signals. That period also saw a gradual compression in volatility, which rewarded premium sellers. The current setup appears to be following a similar pattern, suggesting that the newly established range could persist through November.
The pair’s one-month implied volatility has already fallen from over 11% to near 9% this week, reflecting the market’s adjustment to a less directional environment. This decline in volatility makes selling options premium more attractive right now. We believe the major support at 0.6505 is secure for now, providing a solid floor for these range-trading strategies.
