AUD/USD Price Forecast – Australian Dollar Gets Hammered

The Australian dollar has been absolutely hammered during the trading session on Wednesday as the market may have gotten a bit of a stretch. By breaking down the way it has, the market looks very likely to continue going lower, which quite frankly makes quite a bit of sense as there are a lot of concerns when it comes to coronavirus out there still. At this point, the market has gotten overbought in what had been previously in oversold condition. In other words, this has been an extreme bear market bounce.

AUD/USD Video 16.04.20

The 0.62 level is probably the initial destination, as it was significant resistance before so it should be significant support now. A breakdown below that level opens up the door to the 0.60 level which will be much more significant in its psychological and structural importance. A breakdown below that level opens up a retest of the absolute lows, something that would be quite shocking to see, but is most certainly very possible considering that the Australian dollar is so highly levered to the Chinese economy and by extension the global supply chain, which while looking better at this point, there are still a lot of countries out there that would be on the consumption and that are locked down, meaning that demand will be extremely thin to say the least.

Going forward, I like the idea of fading rallies, as the 0.65 level will more than likely end up offering a significant barrier that will take quite a bit of work to get through. We did break above there, it would be a strong statement by the Australian dollar bullish traders out there, but I think the market has simply gotten far too ahead of itself in the short run.