AUD/USD Forecast – Aussie Dollar Continues to See Support and Resistance

Australian Dollar vs US Dollar Technical Analysis

The 0.6850 level above continues to be very important in the Australian dollar as major resistance. During the Friday session, we are going back and forth, and we are trying to sort out whether or not we have the momentum to break out above there, and right now, it doesn’t look like we do. It’ll be interesting to see how this pair behaves because mainly, I’m watching the reaction to the 50 basis point interest rate cut, which initially was strong, then sold off, risk assets, and then the next day, shot straight up in the air.

I think we’re in a very precarious time because traders will start to ask the question as to whether or not 50 basis points was panicked by the Federal Reserve or if it was just simply the cost of doing business as it were for a soft landing. If you look at history the Federal Reserve has almost never gotten it right, so the odds are they’re panicking or they’re about to. So, if that’s going to be the case, then risk appetite crumbles and it’s shrinking than the U.S. dollar.

That’s what I’m watching out for. We don’t have any signs of it yet, but if you go back through several major market crashes, you’ll see this pattern play out. Initially, the reaction to a 50 basis point cut is great, but if they do it again, the bottom falls out. So, it’ll be interesting to see how they play the markets next, but right now, it’s obvious for me that we are a little stretched in the policy and I think it pulls back to offer value.

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