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The Australian dollar has gapped lower to kick off the trading week, slicing below the 0.75 handle. At this point, the market is simply reacting to a lack of liquidity, and perhaps even a slightly overbought condition in the Aussie. That being said, we have stimulus coming out the United States and that should continue to push the US dollar lower over the longer term, as the central bank and of course the government will flood the markets with currency. Ultimately, the Australian dollar is a great vehicle to use to play the commodity markets, and I think that is part of what will be going on over the longer term.

To the downside, I believe that there is a significant amount of support that people will be paying close attention to, so I think this might end up being a longer-term opportunity. The 50 day EMA is racing towards the 0.74 handle, which is a major round figure as well. Ultimately, I think that the market goes looking towards much higher levels but that does not mean that it is going to be easy, nor does it mean that we are going to get there quickly.

All things being equal, I think that you continue to buy the dips when it comes to the Australian dollar, as it has been such a strong performer over the longer term. Looking forward, I suspect that the Australian dollar is going to try to get to the 0.80 level. However, if we were to break down below the 50 day EMA it could cause a bit of a short-term pullback.

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This article was originally posted on FX Empire

AUD/USD Price Forecast – Australian Dollar takes a nose dive?

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