AUD/USD Price Forecast – Australian dollar falls significantly in risk off event

I have a hard time thinking of a currency that would be much more sensitive to the plight of the Chinese economy than the Australian dollar, as Australia is where most of the hard commodities for the Chinese factories come from. Ultimately, I think that the Australian dollar will continue to fall, because quite frankly it’s likely that the situation is going to get worse before it gets better. However, having said that there is the possibility of a bit of a reprieve.

The 0.7350 level has a history of being supportive, so if we get a bit of a bounce from there it should be thought of as a major surprise. However, I suspect that any rally at this point will probably attract selling pressure regardless. I like the idea of shorting these rallies on signs of exhaustion, until the market somehow finds its way back above the 0.75 handle, which would be a psychological victory for the Aussie dollar.

It’s very unlikely that the markets will be able to reach above there without some type of cooling-off of trade tensions between the economic giants, so until then, I look at the Australian dollar as a currency that should probably be sold as not only do we have the commodity supply and demand concerns, but money tends to flow towards the US dollar when people are concerned, as they will flood into the US treasury markets for safety. Obviously, things can change but it needs to start on the geopolitical front.

AUD/USD Video 20.06.18