AUD/USD Forecast – Australian Dollar Drops Overnight

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Australian Dollar vs US Dollar Technical Analysis

Taking a look at the Australian dollar, you can see, the 0.65 level is an area that we have tested. And as the Americans come on board, we have a question as to whether or not there will be buyers coming back in. That being said, the 0.6450 levels actually the bottom of the overall consolidation region that we have been in. So, it will be interesting to see how the market behaves if we get down there. All things being equal, this is a market that has a lot of support underneath. So it wouldn’t surprise me at all that the market would just go sideways in general. With that being said, the 50 day EMA above has offered resistance right along with the 200 day EMA.

Perhaps some of the plunge overnight was due to the Reserve Bank of New Zealand statement saying that they thought interest rates were about where they needed to be, which was against consensus because most people believe that New Zealand was going to raise rates soon. And of course, Australia, the Australian dollar specifically, tends to move in sympathy. This is a known correlation and is specifically why the AUD/NZD currency pair tends to be so noisy.

For example, the New Zealand dollar got really hammered last night, so the Aussie fell right along with it. That being said, it really hasn’t changed a lot, and now we have to question what the Federal Reserve’s going to do this year. I think you’re going to see a lot of choppiness in the FX markets this year, and I don’t see why the Aussie would be any different. Keep in mind that there is influence coming from Chinese economic numbers that a lot of people pay attention to, so if China does better, the Aussie does better and vice versa. It is a commodity currency as well, so you have to keep an eye on those markets also. But as things stand right now, I just think we’re testing for support, that I believe will more likely than not hold given enough time.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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