Good day forex traders and readers.
Welcome to the weekly AUD/USD review and I hope you had a great week of forex trading. Did you know that the AUD/USD has been trending for some time now but yet it remains as one of the lesser traded currency pair? In forex we always need to be on a lookout for trends 🙂
In the previous AUD/USD forecast we noted on a narrow range of trading due to upcoming economic events. Fundamentally we note that China’s moderating growth will have an effect on the sentiment towards the Australian economy.
Looking at the AUD/USD daily chart above we note that the currency pair was bearish for the week. After the channel support of 0.9130 failed, the bearish pressure gained momentum and is currently testing the immediate support of 0.8900.
The currency pair is now below the bottom bollinger band and this suggests a significant bearish pressure. Should the currency pair continue to receive bearish pressure, we may be looking at an extended bearish target of 0.8600.
Any bullish correction will probably target the support turned resistance of 0.9130.
With the recent economic developments of Australia, investors and traders are speculating an increased possibility of a rate cut. As in my article on how a low interest rate may affect a currency, currencies usually drop in value with a low interest rate and hence now the possibility of it alone is enough to exert a bearish pull.
Among the economic laggards is the Australian budget deficit. It was recently reported that the estimated 15 billion of budget deficit would probably increase to 30 billion. This definitely raised concerns among observers.
In a speech early week, the Rsserve Bank of Australia governor indicated that current inflation rates allowed more room for interest rate cuts to boost the Australian economy. In surveys done among economic experts, the possibility of an interest cut happening on the August 6 RBA meeting is very high. Do be prepared for unexpected volatility.