Australian Dollar Forecast:
- The Australian Dollar was a slouch in 2019 as negligence tellurian expansion and a US-China trade fight pressured a pro-risk currency
- Now, a new turnaround in risk ardour has sent AUD/USD mountainous off October’s lows
- Will a trade understanding signing send a Australian Dollar aloft still, or is it a box of “buy a rumor, sell a news?”
Australian Dollar Forecast: AUD/USD Surges, though Rally Looks Overdone
The Australian Dollar suffered opposite many vital currencies in 2019 as a US-China trade fight weighed on a Aussie’s performance. Recently, however, the proclamation of a “Phase One” trade deal regenerated a currency’s opinion and AUD/USD has been a vital champion – surging from October’s lows and trenchant several levels of technical resistance.
AUD Performance in 2019. Source: TradingView
After President Trump announced a United States and China will accommodate to pointer a understanding on Jan 15, a Australian Dollar enjoyed another bump, relocating absolutely over before resistance. With risk view changeable and a Aussie Dollar reaping a rewards, can a Australian Dollar continue aloft or has a greeting turn overblown?
Looking to AUD/USD specifically, new elemental developments have seen a span transparent several levels of technical resistance. Moving forward, past insurgency will demeanour to offer as destiny support and keep AUD/USD afloat should risk hatred reemerge. To that end, stream conditions exhibit a miscarry has expected turn overextended as RSI treads in overbought territory.
AUD/USD Price Chart: Daily Time Frame (December 2018 – Jan 2020) (Chart 1)
With a Aussie Dollar’s spike on a initial trade understanding proclamation and successive follow-through on Dec 31, it could be argued most of a trade deal’s impact has been baked into a currency’s cost already. Since a specifics of a understanding are astoundingly meagre and story suggests a contingent understanding will expected disappoint, AUD/USD might be offering a matter for converging and see cost bluster before resistance.
With that in mind, AUD/USD might be developed for bearish opportunities as traders demeanour to sell a news as a Jan 15 signing-date nears. Therefore, a pivotal area of cancellation exists around a 0.7080 turn that coincides with a pair’s swing-high in July. Should AUD/USD transcend this level, it would advise risk ardour stays strong and a banking is still adjusting to a news of a trade deal.
That being said, areas of seductiveness on a short-side reside around a 0.6910 turn that aligns with a pair’s swing-low in July, a section that combined hesitancy in a past. A pierce to this cost would yield sufficient converging for a successive miscarry aloft in my opinion, as a longer-term impact of a trade understanding is felt, and tellurian expansion forecasts are revised higher.
Still, a shorter-term conditions of AUD/USD might see Aussie bearishness overcome as expectations are practiced in a middle timeframe. In a meantime, follow @PeterHanksFX on Twitter for updates on this trade idea.
–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
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