AUD/USD Forecast – Australian Dollar Has Rallied Again

AUD/USD Forecast Video for 28-12-2023

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar initially pulled back during the day on Wednesday but then turned around to show signs of life again. By doing so, it looks as if the market is going to try to get to the 0.69 level, an area that will ultimately end up being very important. It’s an area that we have seen a lot of resistance at before, and therefore it makes a strong target and a potential barrier that’s going to be difficult to overcome. After all, the market has gotten a bit overstretched at this point and a correction does make a certain amount of sense.

Keep in mind that we are at the end of the year, and therefore liquidity could become a major issue. In that scenario, the Aussie could go racing toward that level only to turn around and get smacked right back down. However, there’s also the possibility that we break above that level and continue going higher. If that does in fact end up being the case, that would be a very strong move for the Australian dollar. In that scenario, we could see the Aussie go looking to the 0.70 level next. That being said, there’s also the bearish case to be made as we have gotten too far ahead of ourselves.

Underneath, I think the 0.67 level is an area that a lot of people will be paying attention to for potential support, which I also think extends down to the 0.6680 level. Ultimately, this is a market that has been very noisy and overextended, mainly due to what’s going on with the Federal Reserve. After all, the Federal Reserve has moved the dots on the so-called “dot plot” to suggest that there will be a handful of interest-rate cuts in 2024.

From a technical analysis standpoint, we are getting ready to see the 50-Day EMA break above the 200-Day EMA, kicking off the so-called “golden cross.” While I’m not a big fan of this particular indication of bullish pressure, as it is far too late, longer term “buy-and-hold” type of traders love this as a signal. This is something to keep in the back of your mind. Until the Federal Reserve changes its trajectory, it’s likely that we continue to go higher.

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