AUD/USD Price Forecast for 2024 – Another Choppy Year Ahead?

Australian Dollar Forecast Video for 2024

This does make a certain amount of sense as interest rate expectations in the United States have been quite slippery to get a handle on it until the very end of the year. In a twist of irony, despite the fact that we have seen a massive range for the year, it looks as if we are going to close 2023 basically unchanged.

Interest Rates

The beginning of the year saw the Australian dollar strengthened a bit, but it did struggle at the 0.7150 region, where the 200-Week EMA appeared. This was early in the year, the market subsequently dropped as the Federal Reserve started to tighten monetary policy. This makes sense, as the US dollar strengthened against almost everything, and of course tightening monetary policy generally slows down the economy, and of course with the US being the world’s largest economy, it makes a huge dent in demand globally.

However, late in the year we have seen a shift in Federal Reserve expectations, and recently we have even seen the Federal Reserve move the dots on the dot plot to suggest that there should see interest rate cuts in 2024. This works against the value of the US dollar and subsequently, we have seen the Australian dollar take advantage of this, right along with most other currencies against the greenback.

Australian Dollar

The Australian dollar of course is very sensitive to global growth as the Australian economy is so heavily levered to the commodity markets, and by extension the demand for hard minerals and materials that growing economies demand. Most specifically, the Australian dollar is highly levered to what happens in Asia, especially in China. If the Chinese economy struggles, that can also cause a significant amount of downward pressure on the Aussie as well. Regardless, at the end of the day the currency markets move on interest rate differentials, and in that sense, it’s all about the Federal Reserve.

More of the Same

I suspect that 2024 is going to continue to be more of the same, as we just don’t have any real reason to think that the market is going to continue to be very bullish at this rate. All things being equal, the 0.69 level above is an area that is significant resistance, and therefore if we were to break above there, then we could go looking to the 0.7150 level, but at that point in time I would anticipate seeing a lot of resistant barrier. Underneath, the 0.65 level is an area that we could see support.

Quite frankly, I think the market is likely to continue seeing a lot of back-and-forth, and therefore I think we are getting a little stretched. I believe that this is a market that continues to experience a lot of uncertainty, and therefore I think we probably have a lot of volatility coming down the road.

A Tale of Two Markets

I do believe that the beginning of the year is going to be very bullish, but all things being equal, this is a market that will probably continue to see upward momentum stall as soon as people start to worry about the idea of a potential economic slowdown. I think the first month or two could potentially be a bullish market that suddenly snaps back as we have seen such an overextension, and of course the idea that perhaps things might be worse than anticipated due to the fact that the Federal Reserve suddenly sees the need to start cutting rates could have people running toward the US dollar by the end of spring.

At this point, I think we are looking at a range between roughly 0.7150 above, and the 0.65 level underneath.