As the US dollar continues to decline and correct, AUD/USD strengthened on Monday. This trend is partly influenced by the optimistic sentiment in the bond market after President elect Trump chose fund manager Bessent as the US Treasury Secretary. Bessent is an experienced Wall Street figure and fiscal conservative.

The Australian dollar may also benefit from the influx of foreign capital driven by the soaring domestic stock market to a historic high. In addition, the hawkish stance of the Reserve Bank of Australia on future interest rate decisions also provides support for the Australian dollar.

Traders are now focusing on Australia's monthly Consumer Price Index (CPI) for October, which is a key indicator shaping domestic monetary policy expectations.

The Reserve Bank of Australia emphasized in its latest meeting minutes that interest rates will remain restrictive until there is clear evidence that inflation can sustainably recover to the target. However, the Reserve Bank of Australia also emphasized that any future policy adjustments will depend on data, highlighting the importance of the upcoming economic report.

The Australian dollar/US dollar traded around 0.6515 on Monday, with daily chart technical analysis showing an increase in short-term momentum. The currency pair has risen above the 9-day moving average, indicating a potential upward trend.

However, the Australian dollar against the US dollar is still limited to the downward channel, indicating that the broader downward trend is still intact. In addition, the 14 day relative strength index (RSI) is slightly lower than the neutral 50 level. A decisive breakthrough through the 50 level will provide clearer signals for a directional shift, which may confirm the bullish trend.

According to foreign exchange analyst Akhtar Faruqui, on the downside side, the Australian dollar against the US dollar may test the initial support of the 9-day moving average (currently at 0.6492). If it decisively falls below this level, it may push the currency pair towards the lower limit of the downward channel, approaching its annual low of 0.6348. The last time it touched this level was on August 5th.

In terms of the upward direction, the Australian dollar/US dollar may target the upper limit of the downward channel at 0.6570. Breaking through this resistance level may indicate a shift in momentum, which could open the way for a rebound to the four week high of 0.6687.

AUD/USD daily chart