AUD/USD Price Forecast – Australian Dollar Has Surged Lower

The Australian dollar fell significantly in the early hours on Wednesday, reaching down towards the 0.72 region before bouncing a bit. At this point, the market looks as if it is going to continue to see a lot of choppy behavior and confusion, but in general we still see a massive resistance barrier above that has held true. Furthermore, we have the 50 day EMA sloping lower and sitting just above the 0.73 level, an area that has acted as a barrier multiple times.

AUD/USD Video 07.10.21

At this point, I am looking for opportunities to short this market, and will fade signs of exhaustion. The Australian dollar is highly levered to the Chinese economy and quite frankly there are a lot of negative headlines coming out of China at the moment. Keep in mind that the Chinese economy is very opaque, so one has to believe that “when you see one cockroach, there are probably 10 more.”

We have already seen a couple of real estate giants default on bond payments, and although the Chinese central government will almost certainly do something to protect the economy, the reality is that Western companies are going to be very hesitant to invest in the mainland at this point. This coincides with the lack of commodity demand that we see for certain inputs, as the iron and copper markets have started to fade.

At this point, if we break down below the lows of the trading session on Wednesday, I will start to press the position, because I believe that although we have had a nice bounce as of late, it is a bit of a stretch to think that we are suddenly going to see a lot of Aussie dollar buying.

For a look at all of today’s economic events, check out our economic calendar.