AUD/USD Price Forecast – the Australian dollar slumps

The Australian dollar has shown a bit of stability during the day on Thursday, but overall continues to slope a bit. Ultimately, I think that short-term rallies will be sold off as we continue to see more of a “risk off” attitude around the world. The Australian dollar is highly levered to the Chinese economy, and if global markets are going to slow down overall, that’s going to weigh upon the mainland. Beyond that, the US dollar may get a bit of a bid, despite the fact that the Federal Reserve has suggested that it is more “data dependent” going forward and that three rate hikes aren’t necessarily guaranteed for 2019.

AUD/USD Video 21.12.18

Why is this? It’s because the Federal Reserve talking about global and extraneous pressures around the world suggest something that FedEx suggested the other day, that global trade is most certainly slowing down. That is bad for commodities, and by extension commodity currencies like the Australian dollar. We have been in a downtrend for some time, and it now looks like we may try to reach towards the 0.70 level underneath. This isn’t to say that we are going to go straight there, we could very well get another bounce between now and then. However, selling the rallies continues to work against the Aussie dollar and I don’t see that changing in the short term. If we do break down below the 0.70 level, look for a move towards the 0.68 level which is structural support on longer-term charts.