AUD/USD Forecast: Continues to See a lot of Back and Forth

• The AUD/USD has been experiencing a bit of a bounce recently, with a slight increase during the Monday trading session.
• However, it's important to note that this was Labor Day around the world, so thin liquidity must be considered.
• It's difficult to read too much into the bounce other than to note that there is no reason for the AUD to go any lower at this point.

One important support level for the AUD is the 0.66 level, which has been tested multiple times in the past. While it's not surprising to see a bounce from this level, it's worth noting that the market has recently formed a massive bearish flag and a potential "H pattern." These are both very negative signs and suggest that it's only a matter of time before the AUD falls a bit. A short-term bounce is possible, but it may only be a speed bump along the way to lower prices.

The global situation is very tenuous at best, and the AUD is a "risk on the currency." If we break down below the bottom of the hammer from Friday, it opens the possibility of a move to much lower levels, perhaps down to the 0.65 level or even the 0.62 level. On a rally, the 50-day exponential moving average (EMA) above may offer some resistance, assuming that we can break back above the previous trendline that makes up the bottom of the bearish flag marked on the chart.

Overall, the AUD looks negative, and signs of exhaustion after a short-term rally may indicate that it's time to start shorting again. This is a "fade the rally" type of market, and it has been for a while. Given the current environment, it's unlikely that this will change anytime soon.

Be Cautious

One of the factors that investors should consider when looking at the AUD is the state of the Chinese economy. China is Australia's largest trading partner, and any significant changes in China's economic outlook could impact the AUD. Additionally, the ongoing trade tensions between the US and China could also have an impact on the AUD.

Another factor to consider is the state of the global economy. The ongoing COVID-19 pandemic has had a significant impact on the global economy, and any changes in the pandemic's trajectory could impact the AUD. Additionally, any changes in global monetary policy or interest rates could also have an impact on the currency.

Despite the negative outlook for the AUD, there are still opportunities for investors to profit. For example, short-term traders may be able to take advantage of the currency's volatility to make quick profits. Additionally, long-term investors may be able to identify undervalued companies in Australia that could benefit from an eventual rebound in the economy.

At the end of the day, while the AUD has bounced slightly in recent trading sessions, the overall outlook for the currency remains negative. Investors should monitor any developments that could impact the currency and make informed investment decisions based on the latest information available. While there are still opportunities to profit, investors should be cautious and be prepared to adjust their positions as needed.