AUD/USD Price Forecast – Australian Dollar Powers Higher

The Australian dollar has rallied quite nicely during the trading session on Tuesday, reaching towards the 0.7250 level at the time of writing. However, I do see a significant amount of resistance above near the 0.73 handle, so I am not necessarily willing to go “all in” at this point. Yes, it has been a very strong bounce but quite frankly the market has been oversold for a while, and typically the harder things fall, the higher they bounce when they finally do pick up a little bit of a bid or get some type of short covering event.

AUD/USD Video 25.08.21

The short covering event right now is probably Jackson Hole, as there are concerns about the Jerome Powell suggesting that tapering could happen later than some of the Federal Reserve governors have been suggesting as of late, which is of course negative for the US dollar. Nonetheless, Australia has bigger issues than the United States, not the least of which is the fact that the government is trying to kill its own economy. After that, you also have to realize that the Chinese mainland has been reporting less than impressive numbers as of late, which has a direct effect on Australian exports, as China is the number one destination for Australian commodities.

A lot of this falls into the purview of the idea of whether or not the commodity markets do well, which at this point in time the certainly seem as if they are picking up a bit. That being said, pay close attention to the commodity markets such as gold, iron, and aluminum, as they have a massive influence on what happens with the Aussie as well. Also, we have the Jackson Hole Symposium going on this week which could give us a bit of directionality on the US dollar.

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