AUD/USD Forecast: Australian Dollar Rallies to Kick Off Week

Christopher Lewis

It makes sense that the Aussie may be one of the victims of the negativity that seems to be starting to creep around.

The Australian dollar rallied a bit to kick off the trading week on Monday, but as you can see, has failed to hang on to some of the gains. With that being the case, I think we will continue to see a lot of choppy volatility with perhaps a look at the market through the prism of a potential longer-term move to the downside. Therefore, it would make sense that the market continues to see sellers on short-term rallies, which is essentially what I am looking at.

To the upside, the 0.74 level above is offering resistance, and I think will continue to do so. Furthermore, we also have the longer-term “death cross” that just happened, so a lot of longer-term traders will look at that as a very negative sign indeed. It is worth paying attention to the area just below where the 50-day EMA has crossed below the 200-day EMA, which is at the 0.75 level, a psychologically important figure. Furthermore, we have seen quite a bit of previous action there, so I think it makes for a nice short-term target, as well as a nice area to start shorting from if we can get there.

To the downside, if we break down below the 0.73 level, then it is likely that the Australian dollar will continue to go much lower, perhaps reaching towards the 0.70 level which is my longer-term target. I do not necessarily think that is going to be something that happens right away, but I certainly believe that it will happen eventually. The market has continued to see downward pressure every time we either go sideways or rally a bit, and with the Australian economy being locked down it makes sense that the Australian dollar will be sold into.

Furthermore, there are a lot of concerns about the Delta variant around the rest of the world, not just in Australia. The Australian dollar is a commodity currency, so that has a lot to come into play as well. With this being the case, and the fact that the Chinese economy seems to be trying to slow down, it makes sense that the Aussie may be one of the victims of the negativity that seems to be starting to creep around.

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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