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AUD/USD Forecast 17 Sep 12

 

Good day forex traders and koalas!

 

Did you have a good trading week? I sure hope you did. Nothing beats lazing around on a warm weekend with a bagful of green pips 🙂

In the previous AUD/USD forecast i mentioned on the possibility of the extended bullish target of 1.0560. Sentiments were benefiting from a bonds purchase program of the ECB. However the Australian economy displayed signs of weakness as seen from the lower exports.

 

AUD/USD Forecast

 

Technical Analysis

Looking at the AUD/USD chart above, the bullish target of 1.0560 was indeed tested as mentioned. I love it when my technical chart works!

SMA 20 ( RED ) = Flat

SMA 50 ( BLUE ) = Flat

While the currency pair went beyond 1.0560, the resistance region held and the AUD/USD closed below it. Any continued bullish pressure may see an extended bullish target of 1.0750. Caution must be taken though as seen above, the previous attempt failed.

 

Fundmental Analysis

The markets are currently in a risk on / risk taking mode. Equities worldwide are mostly green and higher yielding assets are in demand as risk aversion subsides.

The Australian dollar has an interest rate higher than most developed countries currencies ( 3.5% versus the US Dollar of almost 0% ) and hence in times of risk on sentiments, it usually gets a boast in demand and hence value.

The recent announcement of a new round quantitative easing by the US Federal Reserve went down well with the markets. The idea of stimulus probably brought about confidence. This goes the same for the ECB bonds buying program and the non rejection of the ESM by the German court.

Do continue to observe world wide sentiment towards risk as a gauge.

Trade safely.

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