AUD/USD Price Forecast – Australian Dollar Showing Signs of Exhaustion

The Australian dollar has shown itself to be a bit exhausted to kick off the week on Monday as we gapped lower, turned around to fill the gap, and then fell again. By doing so, it shows that perhaps the Australian dollar has gotten ahead of itself, but it is worth noting that we are sitting right on top of the 50 day EMA which will attract quite a bit of attention. That being said, I think that this all hinges on the idea of the reflation trade and whether or not there is going to be enough stimulus out of Washington DC to get people excited about the commodity trade again.

AUD/USD Video 02.02.21

To the downside I see the 0.75 level as a major support level, so it would not surprise me at all to see that area attract quite a bit of buying pressure. If we were to break down below it, then we have to reset the entire situation but right now I think we are essentially in a “holding pattern” when it comes to the reflation trade, while politicians in the United States try to figure out how to do their jobs. Because of this, I think that we could see a lot of choppiness over the next couple of days but at the end of the day it is worth noting that we are in an uptrend and that has not changed.

Pay close attention to the US Dollar Index, because if we have a general selloff in the greenback, that will also help this pair. On the other hand, the US dollar has been a bit oversold as of late, so a little bit of a pullback probably makes the most amount of sense.

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