- The AUD/USD experienced a brief pullback during Wednesday's trading session but managed to regain momentum later in the day.
- This resurgence indicates a potential move towards the crucial 0.69 level, which holds significance in the current market context.
- It's worth noting that this level has previously acted as a formidable resistance point, making it a key target and a potential obstacle that could pose challenges for further upward movement.
The recent market rally has extended quite a bit, prompting considerations of a corrective phase. Such a correction would align with the natural ebb and flow of market dynamics. However, it's important to bear in mind that we are approaching the year-end, a period when liquidity can become a significant concern. In such a scenario, the Australian dollar could make a swift advance toward the 0.69 level, only to encounter resistance and face a swift downturn.
Conversely, there exists the possibility of a breakthrough above the 0.69 level, which would signify a strong bullish move for the Australian dollar. In this optimistic scenario, the next target could be the 0.70 level. Nonetheless, it's crucial to consider the bearish perspective as well, given the recent overextension in the market.
Support at Multiple Levels Below
Looking at potential support levels, the 0.67 mark is expected to garner attention, with further support possibly extending down to the 0.6680 level. The market has been notably volatile and overextended, largely influenced by developments concerning the Federal Reserve. The Federal Reserve's communication about anticipated interest-rate cuts in 2024 has had a substantial impact on market sentiment.
From a technical analysis standpoint, there are indications that the 50-Day Exponential Moving Average (EMA) is approaching a crossover with the 200-Day EMA, forming the widely observed "golden cross" pattern. While some traders may not heavily rely on this signal, long-term "buy-and-hold" investors often see it as a positive sign. It's a factor worth considering.
In the end, the Australian dollar is navigating a complex landscape, with potential challenges and opportunities on the horizon. The year-end liquidity factor could influence the currency's movements, but the Federal Reserve's trajectory remains a primary driver. Until there are notable shifts in the Federal Reserve's stance, the prevailing sentiment suggests a continued upward trend for the Australian dollar. However, this doesn’t mean that we go straight up in the air.
Ready to trade our daily Forex forecast? Here’s a list of some of the best Australian forex brokers to check out.