AUD/USD Forecast – Australian Dollar Continues to Recover From Lows

AUD/USD Forecast Video for 25-01-2024

Australian Dollar vs US Dollar Technical Analysis

The Aussie dollar initially pulled back just a bit during the trading session on Wednesday, but then shot higher to reach the 200 day EMA and then eventually touch the 50 day EMA. At this point, the Aussie looks like it is trying to form some type of basing pattern so that it can bounce back towards the top of its overall consolidation range.

I currently see the 0.65 level as significant support, and it looks like the market agrees with me. It’s an area where we had seen quite a bit of resistance previously, so there should be a bit of market memory in this region. Now that we have shown that area to be supported, the next target could be, at least in theory, a move to the 0.67 level above, which is essentially the fair value of the overall range between 0.65 and 0.69, which is where I see massive resistance.

I think this year could very well be somewhat range-bound, and therefore I’m starting to look at a lot of currency pairs through that prism. After all, we have the Federal Reserve likely to cut rates, but most other central banks will follow. And if that’s going to be a case of central bank cuts around the world, then it’s just a race to the bottom. We are at an extreme low after a pretty significant sell-off, so a bit of a bounce does make sense.

However, if we were to break down below the 0.65 level, it would open up a move down to the 0.63 50 level, which is an area that could be supported as well. In general, you need to be cautious with your position sizing and very nimble, mainly due to the fact that the markets are basically a short-term event type of situation right now and I just don’t see that changing anytime soon. It doesn’t look like anybody is overly confident in one direction or the other as far as risk appetite is concerned. Speaking of risk appetite, keep in mind the Australian dollar is considered to be heavily influenced by risk appetite so you will have to pay attention to what markets are doing as well.

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