AUD/USD Forecast: Continues to Threaten Major Resistance Region

• The AUD/USD had initially pulled back just a bit during the trading session on Tuesday, testing the crucial 0.70 level.
• The 0.70 level is an area that obviously would attract a lot of attention since it is a large, round, psychologically significant figure, and an area that causes a lot of headlines.
• At this point, the market is more likely than not going to continue to see a lot of noise in this area, which makes quite a bit of sense considering that there are a lot of questions when it comes to the Federal Reserve.

The 200-Day EMA sits above the 0.68 level and is rising. Furthermore, the 50-Day EMA is sitting just below there, and it looks as if it is ready to get above there and start crossing. After all, the so-called “golden cross” will attract a significant amount of attention. Regardless, I think a lot of things out there moving the markets in general, which includes the Federal Reserve tightening monetary policy, or perhaps not if Wall Street is to be believed. Nonetheless, the Federal Reserve is more likely than not going to be focusing on inflation, so the US dollar is not quite dead yet.

Market to Continue Being Very Noisy

However, it’s also worth noting that the Aussie dollar is highly sensitive to the Chinese economy, which of course is in the midst of trying to reopen. That suggests that perhaps there may be demand for Australian assets sexy eyes copper, iron, aluminum, etc. Furthermore, the Aussie dollar is a “risk on currency”, so if the world economy is starting to open and the economic momentum starts to pick up, then it makes a certain amount of sense that we would see the Aussie dollar look attractive.

In general, it’s likely that we have a lot of back-and-forth action more than anything else, but I do think that if we break above the 0.71 level, that is likely that the Aussie goes looking to the 0.72 level. That would be the bullish argument, and case scenario. The market will continue to be very noisy so be cautious with your position size, but as we get closer to the Federal Reserve meeting at the end of January, we will start to pay attention to announcements coming out of the Federal Reserve.