AUD/USD Forecast – Australian Dollar Continues to Look Tired

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar continues to be very noisy as we are hanging around the 0.69 level. At this juncture a pullback could reach towards the 0.6850 level, which is an area that previously had been resistance, and if we break down below there, then the market could drop down to the 50 day EMA.

The stochastic oscillator is a little overbought, and we are at the top of a multi-year range, but really at this point in time, I think a lot of this comes down to what’s going on with the US dollar and perhaps the Federal Reserve as the Federal Reserve just cut interest rates by 50 basis points. A lot of people are thinking that the Federal Reserve is going to continue to be extraordinarily aggressive.

But the question, of course, is whether or not they’re cutting interest rates to ease financial conditions and orchestrate some type of soft landing, or are they cutting interest rates in some type of panic move? For what it’s worth, the Federal Reserve has never cut interest rates by 50 basis points without some type of crash happening afterwards.

We don’t know if that’s the case here, but if we get a lot of concern out there when it comes to risk appetite, this pair will come back down. If we can break above the 0.6950 level, that could be a sign that we’re going much higher and it’s more risk on, but right now, it certainly looks like a pullback makes more sense than not.

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