AUD/USD Signal: No End in Sight for the Aussie Sell-Off

The AUD/USD pair will likely continue falling as risks to the global economy remain elevated.

Bearish view

  • Sell the AUD/USD pair and set a take-profit at 0.6300.
  • Add a stop-loss at 0.6500.
  • Timeline: 1-2 days.

Bullish view

  • Set a buy-stop at 0.6470 and a take-profit at 0.6600.
  • Add a stop-loss at 0.6350.

The AUD/USD price continued its downward trend as the relentless sell-off gathered momentum. It crashed to a low of 0.6447, which was the lowest point since May 1 of 2020. The pair has crashed by more than 11% this year.

US dollar index surges

The AUD/USD price continued falling as the US dollar index continued its bullish trend. The index rose to $114 for the first time in more than two decades as the USD soared against most currencies. This surge happened as the closely watched fear and greed index tumbled to 25 while the VIX index soared to $34.

The US dollar rally continued after hawkish statements by Federal Reserve officials. In a statement during the weekend, Raphael Bostic said that he supported a tougher stance against inflation. The same sentiment was repeated by Susan Collins, the new head of the Federal Reserve Bank of Boston. She argued that fighting inflation will require slow job growth and more tightening.

The pair will react to a statement by Jerome Powell followed by important economic data from the United States. Jerome Powell will likely reiterate what he said last week when the bank decided to hike interest rates by 0.75%. It also hinted that it will hike by 0.75% in November and 0.50% in December.

The pair will also react to important economic data from the US. The Conference Board will publish the latest consumer confidence data. Economists expect the data to show that consumer confidence jumped to 104.5 in August.

Meanwhile, the AUD/USD price also crashed after the OECD downgraded its outlook for the Australian economy. The club of wealthy countries estimates that the Australian economy will grow by 2% from the previous 2.5%. It expects that the economy will slow by 2.2% in 2023.

AUD/USD forecast

The four-hour chart shows that the AUD/USD pair has been in a strong bearish trend in the past few weeks. It managed to move below the key support level at 0.6665, which was the lowest level on September 16.

The pair has moved below the lower side of the Bollinger Bands while the MACD and the Relative Strength Index (RSI) have crashed. The pair will likely continue falling as risks to the global economy remain elevated.

If this happens, the next key support level to watch will be at 0.6300. The stop-loss for this trade will be at 0.6550.

AUDUSD27092022

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Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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