AUD/USD Forecast: Aussie Gets Hammered into the Weekend

Christopher Lewis

This is a horrible-looking candlestick and suggests that we are going to end up going much lower.

The Australian dollar fell a bit during the trading session on Friday as we continue to hear a lot of noise in this general vicinity. Initially, it looked as if we were going to be comfortable standing around the 0.74 handle, but we have since fallen apart and now it looks as if we are probably going to threaten the 0.73 handle again. This is a market that I think ultimately will not only break down below there, but perhaps go looking towards the 0.70 level, which has been my longer-term target for a while.

Recently, the only real discussion I have had about the Aussie has been whether or not it would go all the way up to the 0.75 handle before selling off again? I should also point out that we have now had the “death cross”, so I think some longer-term traders will probably come in and start shorting as well. This should not be a huge surprise though, because Australia is doing everything it can to destroy its own economy. Continued lockdowns will cause irreparable damage to the Australian economy, and it should also be noted that there is real fear of a “double dip recession” in Oz.

If we do rally from here, I would be really surprised to see this market take out the 0.75 handle. Doing so would be a vast sign of strength and would probably send this market much higher. That would take a tremendous amount of effort, and now that the Federal Reserve is out of the way it is difficult to imagine what that scenario would be without some type of external pressure in the form of lockdowns being lifted suddenly, or some type of blowout numbers from the Chinese economy.

Speaking of the Chinese economy, it is starting to show signs of weakness, which is going to do no good for Australia as its largest trading partner is China. Beyond that, pay close attention to iron and copper prices, because that can give you a “heads up” as to where the Aussie may go as well as the Australian economy. This is a horrible-looking candlestick and suggests that we are going to end up going much lower. I am becoming increasingly bearish.

AUD/USD

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.

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