AUD/USD Price Forecast – Australian dollar drifts lower ahead of FOMC

The Australian dollar pulled back significantly during the day after initially trying to rally overnight ahead of the FOMC. The market looks likely to remain very difficult to navigate, because we do have the problems with the Sino-American relations, as it has a direct influence on the Australian economy. Australia is highly sensitive to what happens with China, but with the uncertainty it’s difficult to put a lot of faith in the Aussie. I also recognize that the US dollar has the benefit of several interest rate hikes ahead of it, so that should help the downside as well. At this point, if we break down below the 0.72 level, the market is likely to go looking towards the 0.7150 level next. That’s an area that has been important and giving that up opens the door to the 0.70 level.

Above, I see massive resistance at the 0.7350 level, an area that has been supportive and has seen a lot of selling pressure. Because of this, I think that the upside is somewhat limited in the Australian dollar, and as because of that it’s likely that the easiest trade is to take exhaustive rallies as an opportunity to short. I believe that ultimately this market will drift lower, but if we get a somewhat dovish statement out of the FOMC somehow, that of course would change everything. With interest rates rising in the United States, it makes sense that the US dollar continues to be rather strong.

AUD/USD Video 27.09.18