- The risk-sensitive Australian dollar surged after Trump won the US election.
- The US central bank cut borrowing costs by 25 basis points.
- A Trump presidency is likely to lead to higher inflation due to his policies.
AUD/USD price analysis shows increased bullish enthusiasm due to increased risk appetite following Trump’s victory. However, the price fell through Friday as market participants waited for China to announce new stimulus for its fragile economy.
–Are you interested in learning more about forex options trading? Check out our detailed guide-
The risk-sensitive Australian dollar surged after Trump won the US election. Trump’s policies are known to improve business conditions and fuel inflation. As a result, his victory sent money back into risky currencies and assets like stocks.
Elsewhere, market participants are eagerly awaiting the conclusion of a meeting in China that could result in additional stimulus measures.
Meanwhile, the US Federal Reserve cut borrowing costs by 25 basis points on Thursday. Moreover, the Fed has struck a cautious tone regarding future rate cuts. However, markets still expect another rate cut in December. At the same time, AUD/USD rallied as the greenback retreated after the impact of Trump’s victory wore off.
A Trump presidency is likely to lead to higher inflation due to his policies. The Republican president has proposed cutting taxes and tariffs on imported goods, among other changes that are likely to increase pressure on US prices. Therefore, the Fed faces a tough challenge. If inflation spikes, policymakers may have to pause rate cuts and even consider raising them. Such an outcome would boost the dollar.
At the same time, it will reduce policy differences between the Fed and the RBA. Notably, the Reserve Bank of Australia kept rates unchanged this week and policymakers remained cautious about inflation. Moreover, markets do not expect a rate cut in Australia until May next year.
AUD/USD key events today
Market participants are not expecting big impact reports from Australia or the US.
AUD/USD Price Technical Analysis: Bulls confirm dominance with higher highs
From the technical side, AUD/USD the price made a new high above the 0.6650 resistance level. At the same time, the price is trading well above the 30-SMA, with the RSI above 50, indicating a bullish trend.
–Are you interested in learning more about Forex robots? Check out our detailed guide-
However, the uptrend has stalled, allowing the bears to trigger a pullback. If the price finds support near the 0.6650 level, it will jump higher to make new highs. However, it can break this level to retest the 30-SMA before climbing.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
