AUD/USD Weekly Price Forecast – Australian Dollar Continues Consolidation

The Australian dollar has gone back and forth during the course of the trading sessions making up the previous week, hanging around the 200 week EMA. At this point, the market seems to be anchored right around the 0.7350 level, as the 0.73 level has offered so much support. On the other hand, the 0.74 level above has offered significant resistance, so I think at this point in time we are simply stuck. After all, the market is likely to continue to see a bit of confusion.

AUD/USD Video 16.08.21

It certainly does not help that the Australian government continues to lock down its biggest cities, and that of course works against the national currency. Beyond that, we are starting to see that the Chinese economy is softening, and that of course does not help the outlook for the Australian dollar either, due to the fact that there is a huge correlation between the commodity exports of Australia and the industrial cities of China.

Finally, the US dollar has been strengthening due to a potential lack of liquidity issue, and therefore it is likely that we would see further downward pressure. If we were to break down below the hammer from four weeks ago, the market then probably drops down towards the 0.70 region, offering a nice pullback in what has been a very strong move to the upside. Ultimately, a lot of this could come down to the US dollar more than anything else, as the Australian dollar being punished may have already ran its course but it certainly the behavior of the Australian government has done nothing to help turn things around. At this point, it looks neutral with a slightly negative bias.

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