AUD/USD Forecast – Australian Dollar Choppy During Early Monday Hours

AUD/USD Forecast Video for 12.12.23

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has gone back and forth during early hours on Monday, as we continue to dance around the 200-Day EMA. The 0.65 level underneath is a major support level, as the 50-Day EMA is hanging around in that general vicinity as well. Just above, we have the 0.66 level which is offering a bit of resistance, and then again, the 0.67 level.

The market continues to see a lot of noisy behavior and I think that does make a certain amount of sense considering that we have several central banks speaking this week, not the least of which would be the Federal Reserve. Furthermore, we also have the end of the year issues when it comes to liquidity coming into the picture, and I think that is something that you have to pay attention to as well. After all, this is a scenario where we will continue to see a lot of questions asked about risk appetite, and then of course once we get through this week, it’s very likely that we continue to see liquidity drop out of the markets, as people will be paying close attention to the holidays more than anything else. In general, this is a situation where the market may calm down and dance around in this overall range, which would make quite a bit of sense.

That being said, the reality is that if liquidity drops off drastically, a huge order could send the market in one direction or the other as brokers try to fill those trades. I think that the candlestick from the Monday session is a perfect example of what the market is actually doing, as we continue to just simply grind back and forth. Ultimately, I think this is a market that will continue to be a situation where the risk appetite will be a huge influence on the Australian dollar which is essentially a bit of a “risk meter” for the currency markets. In general, this is a situation that warrants a certain amount of restraint when it comes to position sizing, because you could find yourself shaken out of the trade rather quickly.

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