Advertisement
Advertisement

AUD/USD Forecast – Australian Dollar Breaks Out of Falling Wedge Ahead of the FOMC

By:
Christopher Lewis
Published: Sep 20, 2023, 14:06 GMT+00:00

The Australian dollar has broken out of a falling wedge, which of course is a bullish sign, but it is ahead of the FOMC so this could get squashed rather quickly.

Australian dollar, FX Empire

In this article:

AUD/USD Forecast Video for 21.09.23

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has rallied during the trading session on Wednesday to break above the downtrend line, opening up the possibility of a move to the 0.65 level. While this is a somewhat bullish sign, the 50-Day EMA hangs around that area, and of course we have to look at this through the prism of finding “cheap US dollars”, unless of course the FOMC completely wimps out. It’ll be interesting to see how they play this, because a lot of traders around are banking on that cheap money the Federal Reserve has been offering for what seems like a lifetime now.

If we can break above the 50-Day EMA and 0.6520 level on a daily close, then it’s possible that the market could go looking to the 0.66 level. The size of the candlestick so far during the day is fairly impressive but notice how multiple times to the outside we have seen a lot of wicks get formed, showing just how much resistance there is above. All things being equal, I think this is a situation where we will have to see what the end of the day looks like before putting money toward it. That being said, the 0.66 level above is a major resistance barrier, so I don’t know that we can break above there. That being said, it would be a very bullish sign to break above there and could lead to a much longer term “buy-and-hold” scenario, but at this point in time we still have to remain somewhat cautious about putting money to work.

I do think that the next 12 hours could be rather crucial, but once we get through the close of business on Wednesday, we should have a bit more clarity as to where we go for an intermediate swing trade. All things being equal, keep in mind that the US dollar is considered to be a safety currency, so that could come into play as well. Ultimately, if there is a lot of fear in the market, the Aussie tends to get absolutely hammered as it is so sensitive to commodities and global trade.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

Did you find this article useful?

Advertisement