- The AUD/USD exhibited a substantial rally during Monday's trading session, advancing towards the 200-Day Exponential Moving Average, an indicator that commands the attention of many traders for gauging longer-term trends.
- Positioned above this level lies the psychologically significant 0.66 mark, creating a formidable barrier of resistance.
- The region between the 200-Day EMA and this round figure is poised to remain a bit of a barrier. Also, the 0.65 level lurks beneath, potentially offering a short-term support floor.
In a broader context, the market has the question of whether it can break out from its current state. A significant factor influencing this pair the expectation surrounding the Federal Reserve's stance on monetary policy. The prospect of the Federal Reserve slowing down or even reversing its monetary policy has exerted downward pressure on the US dollar's value. This narrative is expected to persist as a prominent theme as the year draws to a close.
Prudent Position Management is Essential
Delving beneath the surface, the 0.6450 level emerges as a crucial support threshold, with a breakdown below this level potentially triggering a substantial decline in this currency pair. Such a development would likely manifest as a broader US dollar decline across the board, constituting a pronounced "pro-US dollar move." Notably, the trajectory of interest rates in the United States holds sway over the market's direction. Therefore, it is imperative to interpret this market in light of the prevailing sentiment regarding the Federal Reserve's future actions. Presently, it appears that market sentiment leans towards the Federal Reserve remaining relatively subdued or possibly showing signs of hesitation. Nonetheless, it remains challenging to predict the Federal Reserve's decisions with certainty, given its historical record of occasionally making untimely choices.
Momentum is an aspect of this pair deserving of attention, and there are indications that it may be shifting towards a more bullish trend. However, a degree of caution is warranted when determining position size, given the market's susceptibility to fluctuations. In conclusion, the Australian dollar's recent rally and its interactions with key levels have spurred heightened market activity. The market's ultimate direction hinges on the Federal Reserve's monetary policy decisions and the trajectory of US interest rates. While momentum suggests a potential for further gains, prudent position management is essential in navigating this pair, as well as everything else at the moment with the uncertainty out there.
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