Good day forex traders.
Welcome to our weekly review of the AUD/USD. It is almost the end of the year! A jolly merry atmosphere surrounds us koalas 🐨.
In the previous AUD/USD forecast we noted that the currency pair had a rather undecided week. It finished as a slightly bearish doji below 0.72 and the middle bollinger band. The currency pair was resting upon the upper trend line region of the main bearish channel. We would need to see a clear dip below back into the channel to consider the possibility of a return to the bearish momentum.
Looking at the AUD/USD weekly chart above we note that the currency pair was bearish for the week. It seems eager to rush back to the bearish channel as the drop is significant.
Bollinger Bands Rock
I have always proclaim my love for the bollinger bands. It has served to be a great technical indicator for me. As we can see in the chart above, the AUD/USD is now testing the lower bollinger band. The bearish undertones that I mentioned are probably still around.
Fears Of A Yield Curve Inversion
Risk aversion has swamped the markets. Reports indicate of apprehension among traders of a yield curve inversion scenario. In a situation where a rise in short term interest rates is accompanied by falling long term yields, analysts fear of an upcoming recession. This is weighing down on the US dollar and equities. Headlines such as ” Dow worst week since the financial crisis of 2008 ” pretty much sums out the sentiments.
Part of the US government shuts for the 3rd time this year as US President Trump demands to be given budget for his Mexico wall. Investors are weary of political issues and hence sentiments are likely to be affected.
There are reports claiming that President Trump is thinking of firing the Fed chair Powell after the latest interest rate hike. This will probably dampen sentiments further.
We are likely to see a low volume market as many traders will be on holidays. There are still economic data due to be released such as the US CB Consumer Confidence which gives an indication of spending potential by consumers. This flows to retail sales and hence the importance of the data. Members can check in to their dashboard throughout the week to see if the team has any observations or updates on the market.