Global presentation of the AUD/USD and its functioning :
First of all, let's take a moment to better understand what the AUD/USD currency pair represents. This currency cross is the Australian dollar to US dollar exchange rate. This means that this cross represents the rate of the Australian dollar against the US dollar and therefore the exchange rate between these two currencies.
So if the AUD/USD cross shows a price of 0.6810, it means that one Australian dollar costs 0.6811 US dollars to buy. Here the base currency, which is on the left, is the Australian dollar while the counter currency, on the right, is the US dollar.
Unlike some of the other currency pairs such as EUR/USD and GBP/USD which also have the US dollar as a counterparty currency, AUD/USD is not one of the major currency pairs in the foreign exchange market but is still popular with many traders who are interested in the Australian and US economies and their relationship.
Like all other currency pairs, it is on the Forex or foreign exchange market that this AUD/USD cross is quoted. But of course, the trading hours for this currency pair are during the hours that the US and Australian markets are open. Here are the details.
The American session takes place from 3.30 pm to 10 pm (Paris time) and the Australian session takes place from 1 am to 7 am (Paris time).
Note that the traditional hours of the US stock market session include the second part of the European session at the beginning. This means that volatility is particularly high because of the presence of both American and European investors. Trading volumes are high.
As for the opening hours of the Australian session, which takes place during the night in French time, they are the same as those of the Japanese stock exchange in Tokyo, which is an important Asian stock exchange. Here again, the market volatility at these times can be significant.
Of course, you can also take a position on this currency pair outside of these hours, but in this case you must pay attention to the risks of opening gaps.
What are the factors that influence the AUD/USD exchange rate in the foreign exchange market?
As you may already know, there are several elements that will influence the demand or supply of the Australian dollar or the US dollar, and therefore influence the price of the AUD/USD currency pair.
As for other currency pairs, this concerns in particular the central banks whose meetings and other communications are scheduled on the economic calendar. Here, we will follow with interest the publications of the Federal Reserve for the US currency and the RBZ or Reserve Bank of Australia for the Australian dollar.
These two central banks can indeed act on the attractiveness of their currency by manipulating their interest rates. The publication of these rates is therefore a very closely watched event by investors on the foreign exchange market. Indeed, we know that for the United States as for Australia, these rate changes are often followed by a press conference that gives more details on the monetary policies conducted by these two countries and their interest.
There are other elements to consider as well, as we showed you in our section on fundamental analysis. It is important to understand that the exchange rate between the Australian dollar and the US dollar depends on the value that each of these two currencies will gain or lose. This demand can be influenced by economic factors because it is primarily in the context of international trade or banking that these currencies are exchanged.
It will then be necessary to understand how a rise in the dollar may or may not lead to a fall in the Australian dollar and vice versa, because here, several elements must be taken into consideration.
How to make a good technical analysis of the AUD/USD price?
Another type of analysis, complementary to the fundamental analysis is of course the technical analysis of the AUD/USD. This analysis is based on a study of the charts and the current and historical movements of this cross.
Also known as "chartist analysis", this technical analysis tends to detect price patterns that may indicate upward or downward movements in this currency pair. More concretely, analysts use technical indicators that reflect the volatility of the market or the strength of a trend and its direction.
The main indicators that are used here are for example the Bollinger bands, the moving averages, the MACD indicator, the pivot points or the technical support and resistance levels. But these indicators are of course not to be calculated manually even if it remains possible while requiring solid bases in mathematics and statistics. The most innovative current stock market charts generally allow to display directly and thus visually these indicators.
Of course, if you want to do a technical analysis of the AUD/USD, you will still need to be able to interpret these indicators and cross-check them with the other elements at your disposal, especially the fundamentals.
However, it is important to remember that technical analysis, although based on precise mathematical data and figures, is not 100% reliable because the foreign exchange market, like other financial markets, is an unpredictable market and it is also important to be aware of the often strong effect of investor psychology, which is not quantifiable here.
In summary, AUD/USD analysis is not suitable for beginners and requires some knowledge and experience.