AUD/USD Forecast: February 2019
The Australian dollar has been very choppy over the course of the last month, and as we roll into the month of February, I think there are a lot of questions that will be answered during the month of February, not the least of which is going to be whether or not the US and China will get some type of resolution to the trade dispute that we have seen for quite some time. This being the case, I think the Australian dollar will rally a bit if we can get signs of an agreement, because Australia is a major contributor to raw material needs in China. So in a sense, it’s a bit of a supply chain play. That being said, the Federal Reserve is also looking a bit softer these days, so if we can get both of the things going at the same time, that will be a bit of a “perfect storm” for the Australian dollar, so I would be a huge buyer at that point.
From a technical analysis standpoint, I see a significant amount of support underneath at the 0.70 underneath, extending down to the 0.68 handle. It is because of this that I believe we are trying to bottom at this point, but a short-term pullback may be necessary for the Aussie to build up a certain amount of momentum to continue going higher. If we were to break down below the 0.68 level, the market will break down rather significantly, because this has been such important support on longer-term charts.
Just above, I see the 0.7250 level offering resistance, not to mention the fact that the 50 day EMA above, pictured in red, is going to offer a bit of resistance. Once we break that level, then I think we go looking towards the 0.75 level. All we need is some good news coming from China.
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