AUD/USD Price Forecast – Australian dollar fails to hold gains

The Australian dollar tried to rally during trading on New Year’s Eve but failed to hold the gains that were in the early part of trading. The 0.70 level underneath is probably reasonable support, and I think that if we can break down through it we could go much lower, perhaps down to the 0.68 handle. Remember, the Australian dollar is highly levered to the Chinese economy, and of course the US/China trade war.

AUD/USD Video 02.01.19

There was a bit of optimism that initially started out the day when Donald Trump tweeted that the talks with the Chinese are going very well. However, it looks as if the market has treated it with a grain of salt, and of course we have been disappointed in the past. There is a serious lack of liquidity in the market during New Year’s Eve anyway, so it should not be a huge surprise that we would struggle to hang onto gains. However, if we were to break above the 0.71 handle, then we could go to the 0.7250 level. At that point, I would expect a lot of selling pressure as well. The market continues to sell signs of strength, and I think that the Australian dollar is going to continue to suffer at the hands of a softer Australian economy. Remember, as goes China, so goes Australia. The US dollar is a bit of a safety play as well, so keep that in mind when headlines flareup, be it good or bad.