How to Trade AUDUSD
The Australian dollar is one of the most widely traded currencies in the world. Despite being a relatively small country, Australia is home to a variety of valuable commodities and is in an ideal location for trading with Asian nations. Furthermore, the country’s economy is stable and interest rates are relatively low, making it a prime candidate for active trading.
In trading AUDUSD, it is essential to monitor the market for changes. This may include identifying the time when volatility is at its highest and the price is likely to increase. Traders may also want to monitor economic reports that could trigger a major shift in price. If they can find these, they should be able to profit from them.
The AUD/USD pair is currently on the verge of breaking lower, pressing down on its critical Fibonacci support level at 0.6855. The 20 SMA has accelerated its decline and is converging with the Fibonacci resistance at 0.6960. Furthermore, technical indicators are showing a bearish trend within negative levels, indicating strong selling interest.
Trade relations between Australia and the US are also a major factor that influence the AUDUSD currency pair. The two countries have a strong economic relationship and are trusted trading partners. Since 2005, US exports to Australia have increased by over 91%. Further, the Australian dollar is influenced by global commodity prices.
Besides trade relations, the Australian dollar is affected by interest rate differentials with other currencies. When the interest rates in Australia are higher, the Australian dollar becomes more attractive to foreign investors. Conversely, the interest rate differential between Australia and the United States can also change the attractiveness of the AUD/USD. This can cause volatility in the currency pair.
The Australian dollar is the fifth most traded currency in the world. It is issued by the Reserve Bank of Australia and is used actively in trading operations and currency exchange. The Reserve Bank of Australia has a strong influence over the currency, which supports its relatively high interest rates. In contrast, the US dollar is the most traded currency in the world.
The AUD/USD currency pair is known for its volatility throughout trading sessions. It is particularly volatile during the Asian trading session, which typically has low volatility. The pair is correlated to NZDUSD, gold, and USDCAD. These pairs have a positive and negative correlation with each other, and a positive correlation indicates a similar price action.
When the global equity markets rise, the Australian dollar also appreciates. Conversely, when global equity markets decline, the Australian dollar depreciates. During these times, investors seek out safe havens such as a low-risk currency. It is also important to consider that the Australian dollar is heavily dependent on major exports.
The Australian dollar is highly correlated with U.S. dollars and is the fourth most popular currency pair in the forex market. It is a highly liquid currency pair, and the volatility in the Australian trading session is encouraging for traders. The AUDUSD is part of the major group of forex trading because it is linked to commodity prices and risk sentiment.
The Australian dollar has a long-term positive correlation with gold. In other words, when gold prices are rising, the Australian dollar tends to appreciate. The reverse is true when gold prices are low. During the 2008 global financial crisis, the US dollar rose against gold, but it wasn’t as substantial as the gains made by other currency pairs.