Renewed risk appetite boosts the Australian dollar to a two-week high

AUDUSD opened with an upside gap and climbed nearly 1% in early Monday trading, reaching its highest level in two weeks.

Renewed risk appetite at the start of the week, driven by growing optimism over a potential US-China trade agreement, boosted demand for risk-sensitive assets and lifted the Australian dollar. A softer US dollar, following cooler-than-expected September inflation data released on Friday, also supported the pair’s advance.

Monday’s rally now tests a key resistance area at 0.6560, marking the base of the daily Ichimoku cloud (spanning 0.6560–0.6600), where stronger headwinds may emerge. Technical signals remain mixed, as the 14-day momentum continues to trend negative while the stochastic is overbought, though the RSI has crossed above 50 and moving averages are shifting toward a bullish setup.

A sustained break above the daily cloud and the nearby 0.6573 Fibonacci level (50% retracement of 0.6706/0.6440) would strengthen the near-term outlook and pave the way for a test of the 0.6600 zone (cloud top / Fibo 61.8%).

Alternatively, failure to clear the cloud base may pause the current move, though the bias would remain positive while holding above the 100-day moving average at 0.6533.

Investors are now focused on the upcoming Federal Reserve policy decision on Wednesday, where a 0.25% rate cut is widely anticipated. Attention will also turn to Fed Chair Powell’s comments for guidance on future policy direction, along with the release of the US PCE Index on Friday, the Fed’s preferred inflation measure.

Res: 0.6560; 0.6573; 0.6600; 0.6629
Sup: 0.6542; 0.6533; 0.6500; 0.6472