AUD/USD Price Forecast – Australian dollar continues to languish

The Australian dollar continues to languish around the 0.72 handle, as we simply have nowhere to go. We await the Federal Reserve statement, which of course will move the US dollar, but at the end of the day the Australian dollar is more worried about the US/China situation.
Christopher Lewis
AUD/USD daily chart, December 20, 2018

The Australian dollar has languished a bit over the last several sessions, hanging just below the 0.72 handle. This is a market that is highly correlated to the Chinese economy, which has been showing signs of slowing down. This of course is a very negative sign for the Australian dollar, as Australia supplies so much of the raw materials that are needed to China.

AUD/USD Video 20.12.18

The headlines of trade disputes between the US and China certainly will help the Australian dollar either. Ultimately, the market is still in a downtrend, but I think at this point we will get a reaction to the Federal Reserve statement and whether or not they are looking to stay hawkish, or if they are going to struggle a bit. Ultimately, I think that the statement will cause a lot of algorithmic trading, and then after that we will turn our focus to the trade spat between the Americans and the Chinese.

If we get some resolution to that situation, that should be good for the Australian dollar. If we get some type of dovish statement out of the Federal Reserve at the end of the Wednesday session, that could also give a little bit of a boost to the Aussie, but I think that will be short-lived at best. I believe the 200 day exponential moving average above will continue to be very resistive. Ultimately, I am looking to fade rallies until the US/China situation changes.

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