AUD/USD Forecast – Australian Dollar Continues to Fight at the 200-Day EMA
AUD/USD Forecast Video for 07.12.23
Australian Dollar vs US Dollar Technical Analysis
The Australian dollar has rallied a bit during the trading session on Wednesday, breaking above the 200-Day EMA again, challenging the 0.66 level. This is an area that I think continues to be very noisy, and the fact that it is the 50% Fibonacci level from the previous decline also probably adds more noise. Beyond that, you also have to ask questions about Friday, as the Non-Farm Payroll announcement comes out of the United States, and a lot of people will be paying close attention to that.
The size of the candlestick is somewhat telling, because it is starting to take a big chunk out of the sell off during the previous session, but I think at this point we are in a scenario where traders are trying to sort out whether or not they are going to go higher or lower. This will all basically come down to the bond market, at least in the United States, as the interest rate differential is something that has been shrinking as rates in America have been dropping. Furthermore, the Australian dollar is considered to be a bit of a “risk on currency”, that a lot of people pay close attention to.
All things being equal, this is market that I think you need to be cautious with your position size but I think in the short term you probably have a lot of back-and-forth as we wait for the crucial employment figures in America. If bonds start to see yields spike again, that will send the Aussie lower due to the US dollar becoming more attractive. On the other hand, if yields in America start to drop, that will make the Aussie more attractive and therefore more of a “risk on move” would probably happen around the world.
In general, this is a market that I think continues to be one that will also pay attention to Asia, which is the number one destination of most exports coming out of Australia. I think there are a lot of crosswinds at the moment, and therefore we should be very cautious with their position sizing.
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This article was originally posted on FX Empire
