The Australian dollar has initially spent the day on Monday falling to reach down towards the 50-day EMA, but it has turned around to show signs of life.
With that being the case, it looks like the market is trying to sort out whether or not the 0.7150 level will be the floor, or if we are going to continue to see downward pressure.
I think if we break down below the 50-day EMA, that would be a rather negative sign, but keep in mind that the Australian dollar has held up fairly well against the US dollar despite the fact that interest rates in America have been screaming to the upside. The 4.60% level is where we've been dancing around in the 10-year yield in America and that of course is very high and that gets people interested in the dollar.
Top Regulated Brokers
Interest Rate Dynamics and Technical Support
That being said, so market starts to see interest rates start dropping from here in America, that should help the Australian dollar, and other currencies for that matter against the greenback. The 0.7250 level above is a potential target.
Now, with that being the case, I think a slow and steady grind to the upside might be what we are about to see. Keep in mind that the Reserve Bank of Australia recently has raised rates a little bit out of sync with many other central banks around the world.
So, the fact that we're in an area that previously was resistance and now is holding up for support, I think we probably see this market try to go to the upside. Again, we could break down, but I would suggest that if we do break down from here, it's probably not just the Aussie dollar that's going to be suffering at the hands of the US.
Ready to trade our AUD/USD Forex forecast? Here’s a list of some of the best Australian forex brokers to check out.