The Australian Dollar (AUD) is expected to trade between 0.6400 and 0.6470. Over the longer term, it appears to be in a consolidation phase, with anticipated movement between 0.6370 and 0.6515.

In the past 24 hours, AUD briefly climbed to 0.6515 before dropping to 0.6422. Analysts suggest that further declines are unlikely, with a predicted range of 0.6400/0.6470.

Consolidation Phase and Market Risks

For the next one to three weeks, the AUD’s potential strength is contingent upon breaking and maintaining a position above 0.6510. The currency’s recent reversal and drop to below 0.6425 indicate the beginning of a consolidation phase.

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Given the recent price action, we can clearly observe that the Australian Dollar is settling into a tighter corridor after its flirtation with 0.6515 was met with swift rejection. From the way it retraced back to around 0.6422, it’s apparent that momentum towards further advances has faded, at least for now. What we’re likely seeing is a period of reduced directional pressure, with the currency shifting into a phase of low volatility, likely driven by a broader cooling in risk appetite as traders reduce leveraged directional bets.

Tan’s call for a short-term range between 0.6400 and 0.6470 appears to be grounded in the fact that there was no sustained attempt to break above recent highs. That said, the line in the sand remains fixed at 0.6510. Until we see a firm and sustained move above that level, expecting upward momentum to resume is premature. It’s not enough for the market to test those highs — the reaction around those levels tells us more than the touch itself.

Opportunities in a Narrowing Range

If you’re working with options or other leveraged structures, this narrowing of the range could offer an opportunity to lean into income-generating strategies, particularly ones involving short straddles or strangles — provided the implied volatility remains elevated relative to realised. However, it’s essential to monitor the space between 0.6370 and 0.6515 closely. Moves outside of this broader band are more likely to trigger a directional pickup, and that would flush out any positional complacency.

Looking at how the retracement unfolded, it revealed a gap in follow-through demand. The sellers appeared to have stepped in forcefully as the price approached the recent top — suggesting that there’s still no consensus for a breakout. From our perspective, that shifts the emphasis for those trading directionally. It’s no longer about riding a trend. Instead, it’s about being nimble and recognising when the market is turning inwards, rather than expanding out.

Liu’s suggestion that fresh downside is unlikely holds only as long as price respects support areas near 0.6400. If breached, it may not take much to see flows accelerate, especially if broader risk sentiment turns. We’ve seen historically just how quickly sentiment can pivot around inflection points like this one.

From a practical standpoint, we should be staying patient. The risk-reward for directional trades narrows when price gets parked mid-range. If anything, we’re watching for sharp intraday reversals, as they may mark the start of volatility compressions unwinding — especially with macro influencers like US data or regional commodity prices playing a background role.

As always, entries and exits should account for wider swings, and order positioning needs to reflect target precision. We’re not in a market right now that rewards chasing late. The sideways price action demands subtlety, filters more noise, and rewards setups that materialise from deeper consolidation. It’s worth focusing more on the structure than the ticker for a trade worth taking.

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