AUD/USD Forecast: Finding Headwinds Above - 4 October 2019

Christopher Lewis

The Australian dollar has rallied a bit during the trading session on Thursday to break the top of the hammer from Wednesday. This is a good sign, but when looked at in the larger context of the market, you can see that we are simply at the “fair value” area. The 0.6750 level is an area that the market seems to be attracted to, so it’s not a huge surprise to find that we are here heading into the jobs figure of the United States. That of course will have a major influence on the greenback, and that is half of the equation here.

The Australian dollar of course is highly sensitive to China, because Australia is a major supplier of raw materials to that economy. As the Chinese economy has been suffering and slowing down, it makes sense that the Australian dollar is doing the same. All things being equal, the market is likely to be very noisy heading into the jobs figure, and at this point it could offer a nice opportunity for a “reversion to the mean” type of trade.

What I mean by that is that if we get some type of major pop higher, especially considering a port number, it is probably only a matter of time before we run into exhaustion, and then start selling off again. After all, it would take a major shift in overall sentiment to send the Australian dollar to the upside. The 50 day EMA is drifting lower and just above, and as a result I think that could be a nice benchmark from which to start selling if that happens.

To the downside, if we were to break down we could go testing the lows again but the lows being broken to the downside should open the door to the 0.65 handle. That obviously is a large, round, psychologically significant figure, so I think as we reach towards that area we will probably run into a bit more trouble. In the meantime, I prefer to fade rallies as they occur. The US dollar should continue to strengthen even with poor economic data because it would show that the world is heading into a recession everywhere, with the US being one of the last holdouts. I have no interest in buying this pair, as we simply have no reason to think that the US/China situation is going to get drastically better anytime soon.

AUDUSD

About the Author
Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

Currency Pairs:
Comments

Did you have a good experience with this broker? A bad one? Tell our team and traders worldwide about your experience in our User Reviews tab. Your email address will not be posted.

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments
Add Comment

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.