AUD/USD Forecast – Australian Dollar Continues to Drift Lower

AUD/USD Forecast Video for 04-01-2024

Australian Dollar vs US Dollar Technical Analysis

The Aussie dollar initially tried to rally on Wednesday but gave back gains rather quickly as we continue to see the US dollar recover a bit. With that being the case, it does make a certain amount of sense that perhaps you need to be on the sidelines waiting to see what happens in the next few pips.

After all, we have the ISM numbers that will have its influence and of course the jobs number on Friday. So, the question then becomes, did we reach the top of the range and are we breaking down? Or is it more likely that we are just simply pulling back from a overbought condition? It could be either at this point, and the 10-year yield is going to have a lot to say about where the US dollar travels.

Right now, it was just simply oversold. So, it’ll be interesting to see how this plays out. Remember, the Federal Reserve has moved its dot plots, so it does suggest that perhaps there are going to see rate cuts next year. But then you have to ask why. After all, the Federal Reserve suddenly cutting rates might not be due to the fact that it beat inflation. It might have more to do with some type of economic concern.

If that’s the case, then the Australian dollar will most certainly be a loser, as it is attached to commodities and growth, as well as risk taking. So, with this, there are a lot of questions to ask. In the short term though, it just simply was overbought, so the correction continues. The 0.6680 level is an area that I think could be somewhat interesting to pay attention to, and we are approaching it rather quickly.

If we do bounce from there, it’s possible that we return to go looking toward the 0.69 level again. And it’s probably worth noting that longer term traders are getting excited about the so-called golden cross, which occurred a couple of candlesticks ago. So, with that, the downside is probably somewhat limited, unless of course something shifts in the bond markets.

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