Good day forex traders and readers.
Welcome to another AUD/USD forecast by The Forex Koala. I hope you had a great week of forex trading.
In the previous AUD/USD forecast we noted that the currency pair was testing the support of 0.9210. It was a crucial support as a failure of which might open up further bearish weakness. From a fundamental point of view, the Australian equity index ASX 200 continued to be red due to weak sentiments.
Looking at the AUD/USD daily chart above we note that the currency pair had dropped further and broke beyond 0.9210. Should the daily candle remain below this support and resistance region, we may be looking at an extended bearish target of 0.9 for the AUD/USD.
Any bullish correction may see the currency pair testing the resistance of 0.9325 again followed by 0.9400 as suggested by the middle line of the bollinger bands.
The Aussie dollar is heading towards it’s largest quarterly drop since 2008.
Markets generally recovered for the week and this includes the ASX 200. However as we note, there is a disconnect versus the Australian dollar which remained plagued with weakness.
China is suffering from a cash crunch and as it’s economic growth slows, it inevitably affects the Australian economy being it’s largest trading partner. The US Federal Reserve’s Ben Bernanke comments on the tapering of quantitative easing probably reduced demand on Australian equities too.
As demand for Australian equities reduce, we would probably see a reduction of demand for Australian dollars too. This could be one of the reason for the currency’s drop in value as traders sell the Aussie for other currencies.
Check out the weekly pivot data for the AUD/USD below for some possible indications of support and resistance.
R3 0.9965 R2 0.9803 R1 0.9507 PP 0.9345 S1 0.9049 S2 0.8887 S3 0.8591