Good day forex traders and readers.
Welcome to another weekend edition of the popular AUD/USD forecast. A number of readers made almost a thousand pips following us from above parity for the Aussie but hey not everyday is a Fantastico day and hence do get your proper money management going 🙂
In the previous AUD/USD review we noted that the currency pair remained below the support level of 0.9210. Continued bearish momentum might see an extended target of 0.9. Fundamentally we continue to see the China cash crunch dampening the Australian economy being it’s largest trading partner.
Looking at the AUD/USD daily chart above we note that the currency pair went lower and is approaching the extended bearish target of 0.9.
The bottom bollinger band ( red ) is currently functioning as an immediate support of for the AUD/USD bearish momentum. Should a bullish correction happen, an extended bullish target would be 0.9320.
Continue to pay attention to the bollinger bands as it has been rather influential on the price action thus far.
The ASX 200 is green for the week and hence from an economic sentiment point of view, the outlook is positive. Having said so, the Australian dollar remains depressed and this remains a complicated issue for many.
The main school of thought is that the markets are speculating a further interest rate cut by the Reserve Bank of Australia. With China continuing to experience slower growth, it is believed that the RBA must continue to adopt an accommodating stance and hence bearish pressure on the value of the AUD/USD remains.
Another possibility would be the drop in the price of gold. It has lost a fair amount of value and being a primary export of Australia, this will probably depress the Aussie dollar.
Of interest would be the comment during the recent interest meeting where the RBA governor was reported to have commented that the central bank board deliberated for a long time before the decision was made to hold rates. Many in the markets are speculating that the consideration to cut interest rate was probably strong.
Refer to the weekly pivot data for the AUD/USD below for some possible indications of support and resistance
R3 0.9421 R2 0.9353 R1 0.9247 PP 0.9179 S1 0.9073 S2 0.9005 S3 0.8899