AUD/USD Forecast: Aussie Pulls Back from Crucial 0.70 Level

Christopher Lewis

This is a market that I think will be choppy and difficult to put a lot of money in.

  • The AUD/USD currency pair pulled back a bit from the crucial 0.70 level, as we have seen happen multiple times.
  • As we wait for the CPI number to come out on Wednesday, it’s likely that we are going to see some type of bigger move.
  • If the CPI number comes out hotter than anticipated, which would be the 0.5% level month over month, that could send this market reeling to the downside.

On the other hand, if we turn around a break above the 0.7050 level, then it’s probably going to be a result of the CPI number coming out cooler than anticipated. In that scenario, it’s possible that market participants may do everything they can to convince themselves that the Federal Reserve is going to loosen monetary policy. While that may take some of the aggressiveness out of the situation, the reality is that we are still very much in a downtrend, and for multiple reasons.

Commodity Markets Selling Off

When you look at commodity markets, they have been selling off in general, and that of course puts a bit of negativity into the Aussie dollar. I think given enough time, we will probably try to test the lows again, but I don’t think necessarily that it is a market that we should be buying. However, there are a couple of levels above that could cost some issues anyway. Not the least of which would be the 200-day EMA which is sitting just below the 0.72 level.

If we turn around and start falling apart, the 0.69 level is an area where I would see a lot of support, and if we break down below that level then we will almost certainly try to get down to the low at 0.67. Keep in mind that there is a lot of economic and inflationary noise out there that is going to cause this market to be choppy at best. The 50 Day EMA is right in the middle of the consolidation area that we are in right now, so that will attract a certain amount of algorithmic trading as well. This is a market that I think will be choppy and difficult to put a lot of money in. However, we should get a bit more clarity by the end of the Wednesday session, so analysis tomorrow will probably be much more convincing.

AUD/USD

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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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