AUD/USD Forecast – Australian Dollar Gives Up Initial Gains

AUD/USD Forecast Video for 28.06.23

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar initially shot higher during the trading session on Tuesday but gave back gains to show signs of hesitation. The 50-Day EMA is offering a little bit of resistance, and the area above there finds the market between that indicator and the 200-Day EMA, typically an area that causes a lot of volatility.

Recently, we had been stuck between 0.68 and 0.66 in a relatively well-defined area of consolidation. However, in the last couple of weeks, we have seen volatility pick up quite drastically as we plunged below the bottom of that consolidation, only to turn around and rip above the top of it before pulling back yet again. In other words, the market has completely lost its mind.

With that being said, I think you have a situation where we have to look at this through the prism of volatility more than anything else. You will need to protect yourself if you are absolutely insistent on trading the Australian dollar, which at this point might be a bit difficult to do. Keep in mind that there are some external factors you need to pay close attention to if you are going to try this market, as the Australian economy is almost purely export based.

While the Reserve Bank of Australia has recently raised interest rates by 25 basis points out of the blue, the reality is that Austria is still held hostage by global demand for its hard commodities. This is especially true when it comes to the Chinese economy, which of course is the number one export market for Australians. Pay close attention to commodity prices overall because they can give you a bit of a “heads up” as to what’s going to happen with the Australian dollar as well.

On the other side of the equation, you have to pay close attention to the fact that the Federal Reserve is choosing to stay tight with its monetary policy, so that does drive a certain amount of US dollar strength, especially as interest rates in America remain so elevated. Because of this, I think ultimately this pair does fall from here, but it needs to show its hand first. As things stand right now, I am extraordinarily neutral on this pair, foregoing the idea of treating such a risky environment.

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