AUD/USD Price Forecast – Australian Dollar Pulls Back From Major LevelThe Australian dollar initially tried to rally during the early hours on Monday, but then ended up breaking below the crucial 0.65 handle. At this point, the market seems to be recognizing the 0.65 level as a bit too far.
The Australian dollar initially tried to rally during the trading session on Monday but gave back the gains as we continue to see a lot of concerns when it comes to the global economy. The Australian dollar is overly sensitive to risk appetite in general, so it does make quite a bit of sense that the Aussie is starting to rollover as people are concerned about whether or not there is going to continue to be growth. After all, Australia provides a lot of the raw materials for places like China to build “things” for the rest of the world. With that being the case, the Aussie continues to be a proxy for not only China but the global supply chain.
AUD/USD Video 12.05.20
Furthermore, the US dollar is considered to be a “safety currency”, which of course makes quite a bit of sense that it would gain when people are concerned about growth and coronavirus recovery. There is a school of thought where the recovery may be slower than originally thought, as there has been so much damage done to demand. With that being the case, I do anticipate that eventually we go much lower in this market, even though it has been stubbornly resilient. That being said, if the market was to break above the 0.67 handle, and consequently the 200 day EMA, then the market should continue to go much higher. Having said that, I do favor the downside in a market that has been overbought for quite a while. Expect volatility regardless of what happens.