AUD/USD Price Forecast – Australian Dollar Gaps Lower

The Australian dollar has gapped lower to kick off the trading session on Monday, as we continue to have a lot of coronavirus fears out there, that of course is going to weigh upon the Australian economy as it is so highly levered to China, and of course the rest of Asia as well. As the virus is starting to spread throughout that region, it makes quite a bit of sense that the Aussies will suffer at the hands of this issue as well. A bounce from here should simply offer a nice selling opportunity, especially near the 0.67 handle.

AUD/USD Video 25.02.20

Any signs of exhaustion in this area would be a nice selling opportunity, as it would offer value in the US dollar. If we were to break down below the bottom of the candlestick for the trading session on Monday, that could send this market towards the 0.63 level, which I do think is ultimately the destination as this market has completely collapsed. That doesn’t mean we get there tomorrow, and obviously we need to get in an area that offers plenty of value in the US dollar to feel confident shorting. It’s not until the market breaks above the 0.6775 level that I’d be willing to buy this market, as the Australian dollar is suffering for multiple reasons.

The Reserve Bank of Australia is very likely to cut rates relatively soon, and that of course is been priced in this market. Furthermore, the Peoples Bank of China continues to do what they can to liquefy markets, so it has a bit of a “knock on effect” over here.