The Australian dollar has seen some modest gains in recent trading, but it's been a choppy ride for the currency. The AUD/USD currency pair is dealing with several uncertainties at once, making it difficult to predict how the Australian dollar will behave in the coming weeks.
Central Banks Interest Rates Policy in Focus
One of the biggest concerns for investors is what the Federal Reserve will do in terms of interest rates. Some argue that the next rate hike could be the last, while others believe there will be another one after that. This uncertainty is causing a lot of volatility in the market, as traders try to anticipate what the Fed will do next.
Another factor that is affecting the Australian dollar is global growth. As demand for commodities increases with global growth, the Australian dollar, which is closely tied to commodity prices, is likely to see a boost. However, there are concerns about whether global growth will continue at its current pace or slow down in the coming months.
The Reserve Bank of Australia has chosen to keep interest rates steady in its last decision, which suggests that the country may be at the end of its interest rate hiking cycle. This could put a damper on the Australian dollar's performance, as higher interest rates often attract foreign investment and boost the value of a currency.
From a technical perspective, the 50-Day EMA is currently sitting at around the 0.6750 level and is starting to drop. This could act as a resistance barrier, making it difficult for the Australian dollar to make further gains. However, if the currency does break above this level, we could see it move towards the 200-Day EMA, which is just above the 0.68 level. This is an important area that has been tested multiple times in the past. That being said, it isn’t impossible to break above that level, but it would take momentum to say the least.
In Summary
- Overall, the Australian dollar is facing a lot of uncertainties in the coming weeks, which could make for a choppy market.
- While there are some positive signs for the currency, such as global growth and potential technical breakthroughs, it remains to be seen how these will play out in the long run.
- Investors should keep a close eye on the market and be prepared for potential ups and downs.
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