AUD/USD Forecast – Aussie Dollar Continues to Bounce About

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has fallen pretty significantly during the course of the early hours on Monday slicing through the 0.6450 level. At that point we made a big move down to the 0.63 level, which is an area that had been massive support previously. However, we turned around and now as the New York Open begins we are mucking about the 0.6450 level again. So, did the Australian dollar just bottom?

We don’t know, but I will be watching this pair because if we can stay above the 0.6450 level and close above there on a daily chart, then you can make an argument for that. One of the things that I am noticing is that the US dollar seems to be taking it on the chin due to traders around the world are worried about the Federal Reserve cutting rates. Rates are dropping already, so that makes the dollar a little less attractive.

But the question then becomes, is there a rush into the bond market? Because if there is, then you need U.S. dollars and ironically, those lower yields continuing to get lower actually makes the U.S. dollar more valuable. So, it’s a bit of a balance question at this point. The Australian dollar has been pretty miserable for a while. So, it does make sense that we get a little bit of a bounce, but I’m not overly aggressively bullish at this point. Ultimately, this is a market that will probably move in the direction of the USD overall. By that, you will need to watch what the greenback is doing against the other major currencies.

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