Good day forex traders and readers.
It is a wet weekend for me and probably for the Aussie dollar too. All this weakening is a big contrast from the bullish rallies of yesteryear. The big question is will the bulls ever return.
In the previous AUD/USD forecast we noted that it was testing the support region of 0.9180. Should this support failed, the currency pair might test the immediate support of 0.9080 next. The currency pair was in a bearish channel. Reserve Bank of Australia officials were reported to have indicated the possibility of intervention and this brought about much bearish pressure.
Looking at the AUD/USD daily chart above we note that the currency pair was bearish for the week, continuing the momentum from the previous week. It was testing the immediate support of 0.9080 as expected and I love it when my forex charts work!
I have projected a new immediate support at 0.9060. Should this support fail, we may be looking at an extended bearish target of 0.8900. This was a previous low and also the end point of a loose head and shoulders pattern that seems to be unfolding for the currency pair.
Any bullish recovery may see a test of the resistance region of 0.9200.
The impact of the suggestion of intervention by the Reserve Bank of Australia officials continued to inflict bearish pressure onto the AUD/USD. Many traders are also speculating an impending interest rate cut by the RBA.
It was reported that a foreign bid for an Australian mega company was rejected and a number of investors saw this as a missed opportunity of financial injection for the Australian economy. With the recent under performance of the Australian economy and the discussions of the raising of the Australian debt limit, many traders are concerned about a rising deficit for Australia.
In view of the current fundamental sentiments, we may expect a rocky situation ahead for the Aussie dollar. Next week brings us important economic releases such as the Australian retail sales and the interest rate decision early week. Caution is advised.