AUD/USD Forecast: Australian Dollar Continues to Look Soft

Christopher Lewis

More likely than not you are probably better off waiting until early next week for some clarity.

The Australian dollar initially tried to rally on Wednesday but continues to look at the 200-day EMA as a potential barrier. In fact, we ended up forming a bit of an inverted hammer as we reached towards the Federal Reserve announcement. That being said, the market looks as if it is continuing to pay close attention to the Reserve Bank of Australia and its dovish behavior. Commodity markets do have an effect on this currency, but it is also worth noting that recently we have seen a bit of negativity when it comes to the Chinese mainland, thereby driving down the demand for copper and other hard assets that so many Aussie traders focus on.

Looking at this chart, if we break down below the 0.74 handle, it is very likely that we could go looking towards the 0.73 level. On the other hand, if we turn around and break above the 0.75 level, then it is likely that we will see a turnaround and an attempt to make an even bigger move to the upside. After all, we did just form a massive “W pattern”, but it is also worth noting that the market seems to be fighting that notion. The 200-day EMA will continue to cause a lot of noise, and it is also worth noting that the 50-day EMA is sitting just below. With that in mind, I think that it is going to be difficult to continue going lower right away, but it is obvious to me that the market has changed its attitude over the last couple of days.

If we get a continuation of the overall bullish attitude when it comes to commodities, that might help this market out. However, if the US dollar continues to see appreciation due to either fear or tapering, that could send this market much lower. Ultimately, I think that the one thing you can probably count on is a lot of noisy trading, especially considering that we also have the jobs number coming out on Friday. That can cause a lot of volatility in the greenback as well, so more likely than not you are probably better off waiting until early next week for some clarity. However, the levels that I have talked about are decent hints.

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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