AUD/USD Forecast: Aussie Slams into Previous Crucial Level

I think this is more or less going to be a technical move heading into that GDP announcement, which obviously could cause a significant amount of volatility.

The Australian dollar rallied a bit on Tuesday to break above the 0.73 handle. This is a bullish sign, but we gave back those gains as we started to reach into the major area of consolidation that we had seen on the way down. In fact, the market has pulled back from that area to show just how difficult it is going to be to overcome this region. By pulling back the way we have, it does look as if the market is trying to shy away from the 50-day EMA which currently sits at the 0.7381 level.

Keep in mind that the Australian GDP figures come out in the next 24 hours, and that will obviously have a major influence on the Australian dollar itself. That being said, we may finally be able to answer the question whether or not this trend is going to continue to the downside, or if we will turn around and rally right along with the uptrend that got us all the way to the 0.78 handle. Furthermore, we also have the non-farm payroll numbers coming out on Friday, as it will have a major influence on the US dollar as you would expect.

The US dollar strengthened against multiple currencies, so I do not necessarily think that the pullback had much to do with the Australian dollar itself. I think this is more or less going to be a technical move heading into that GDP announcement, which obviously could cause a significant amount of volatility. Furthermore, you should also pay close attention to whether or not there is a “risk on” or a “risk off” attitude out there. The Australian dollar is more than likely going to continue to pay close attention to whether or not the risk appetite is still out there, as the Australian dollar is highly levered to commodities, global growth and expansion in general. Keep in mind that Australia has a major trading partner in China, as China uses so many of the raw materials coming out of Oz. With that in mind, pay close attention to industrial metal such as copper and iron, but also pay attention to that GDP print. Both of those areas of study could give you an idea as to whether or not we can finally break above the 0.74 handle, opening up the possibility of this market going higher.

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.