AUDUSD will grow to 0.64900 amid US rating downgrade

The AUDUSD currency pair gained 0.8%, closing at 0.64563 on Monday, May 19, following Moody’s decision to downgrade the US long-term sovereign rating from AAA to AA1. On Tuesday, May 20, the daily candle remained steady at 0.64460 as the market awaited the Reserve Bank of Australia’s interest rate decision. The rate was cut by 25 basis points to 3.85%, as expected. This triggered a slight decline of 0.26% (165 points) in the next half hour, but no significant weakening of the Australian dollar against the US dollar occurred. The rising US external debt, already at $36 trillion, pushed the dollar index down by 0.36% to 100.335 points.

The 0.64000 level acts as support for the AUD/USD’s upward movement.

The daily Relative Strength Index (RSI) has declined from the overbought zone since late April to 56, signaling no clear trader bias or trend direction for the pair. The four-hour RSI stands at 64, suggesting a short-term upward price trend.

The Moving Average Convergence Divergence (MACD) indicator on the daily timeframe remains in the positive zone above the zero level, slightly weakening the buying momentum. The four-hour MACD entered positive territory last night, with its 9-day simple moving average about to cross the zero level from below.

Moody’s downgrade of the US sovereign rating has renewed dollar selling, prompting markets to reassess the broader economic implications for the US. Additionally, Federal Reserve officials continue to signal a cautious stance on interest rates, reflecting ongoing economic uncertainty.

Trading strategy option: buy at the current price with Take Profit at 0.64900 and Stop Loss at 0.63800.