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AUD/USD Price Forecast – Australian Dollar Bounces on Fed Comments

The Australian dollar has bounced a bit during the trading session on Monday as Jerome Powell said on late Friday that he was prepared to help the markets.
Christopher Lewis

The Australian dollar bounced significantly during the trading session after initially gapping lower on Monday. The Federal Reserve looks likely to cut rates, and it’s very likely that any interest rate cut by the Reserve Bank of Australia will be matched. Because of this, it’s very likely that traders are simply trying to hedge their bets because the Australian dollar has been sold off so drastically over the last couple of months. In other words, perhaps the United States needs to catch up with Australia when it comes to loose monetary policy.

AUD/USD Video 03.03.20

Gold has also gotten a massive boost during the trading session as well, so that of course helps the Australian dollar. The question will be whether or not the Reserve Bank of Australia has an extraordinarily dovish statement later in the day. If they do, then it’s very likely that the Aussie could roll right back over. However, the Federal Reserve is going to be paid more attention to, and therefore if they give the rate cuts the people were expecting, it’s likely that we will continue to see US dollar weakness, at least in the short term.

A bounce towards the 0.67 level is possible but having said that it’s very difficult to get aggressive in one direction or the other right now. It is after the central bank statement coming out of Canberra that we will be able to trade this with a little bit more confidence. Having said that, it is fair enough to say that it is oversold, so a bounce could make a certain amount of sense. With this, I’m cautiously optimistic for the next couple of days but then expect a complete turnaround.

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