Good day forex traders and readers.
It’s the weekend again and it was a miserable week for me. Not due to forex trading but because I was quite sick. So to you my dear readers out there, do take good care of your health as I feel that it is more important than wealth!
In the previous AUD/USD forecast we noted that the technical situation was bearish. Close monitoring should be done to see if 0.89 would be breached. From a fundamental point of view the currency pair was also getting bearish pressure from the Reserve Bank of Australia whose officials were reported to have made comments regarding excessive strength.
Looking at the AUD/USD daily chart above we note that the currency pair did touch the 0.89 support and dipped below. A few readers who were much stronger in fortitude than me, insisted on waiting for 0.89 proper rather than taking profit as mentioned in the previous review. Now they are happy 🙂 Just be careful though as this could have easily ended up on the other side of the story!
After midweek we noted that the AUD/USD started to recover and it is now above 0.89 again. As I mentioned previously, I got a feeling that this support level is strong and hence we will need to monitor if this region will be a turning point for the momentum.
Should a bullish correction occur, I expect the immediate bullish target to be just above 0.9.
The US Federal Reserve has announced the decision to commence quantitative easing tapering and this definitely had a significant impact on sentiments and market dynamics. Equities were mainly green and risk appetite of traders increased. Many investors feel that the taper brought about an indication that the US economy is improving. The Aussie dollar being a higher yielding currency, probably received demand too.
Lacking other major unexpected economic events, I would like to believe that the fundamental climate of Australia remains biased towards a weaker Australian dollar. Hence we need to be careful and determine in the coming days if the bullish correction that happened late week was merely a knee jerk reaction.