AUD/USD Forecast – Aussie Starts to Look Tired

AUD/USD Forecast Video for 29-12-2023

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar initially tried to rally again on Thursday, but it looks like we aren’t giving up a little bit of momentum. This isn’t overly surprising. After all, the market has gone straight up in the air for a while, and sooner or later, you have to come back down to earth. Gravity comes into play, and you get a pullback.

That being said, you should also pay close attention to the 0.69 level as it is a major resistance barrier. We have a lot of questions to ask right now when it comes to the Australian dollar because it is so highly levered to commodity markets, but it’s also levered to global growth. There are a lot of concerns about global growth right now, but it seems over the last, say, two months or so, traders have been focusing more or less on the Federal Reserve.

With interest rates in the United States set to drop in 2024, people are trying to front-run the Federal Reserve’s move and short the US dollar. That being said, if they are cutting rates due to some type of economic concern, that actually works in favor of the US dollar longer term. The Australian dollar has been very strong, but in an environment where we could have economic trouble, a commodity currency is not going to perform well, especially the Australian dollar as it is highly levered to China, which is also highly levered to the rest of the world. With all this being said, I do think we get a pullback, but I think the 0.6680 level is about where you start to see serious support come back into the picture. You also have to keep in mind that liquidity is a bit of an issue between Christmas and New Year’s Day.

So, I wouldn’t read too much into a pullback other than it’s a bit of profit taking, at least in the time being. This time of the year demands you to be flexible.

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