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AUD/USD bounced off the monthly high as the risk-on sentiment faded. Australian private investments dropped more than expected, and also added pressure on the aussie. In addition, the Commonwealth Bank of Australia (CBA) has downgraded its near-term forecasts for the Australian dollar as they see the risk of a double-dip US recession. Indeed, the current picture is quite dire with constantly rising cases all over the world.
Besides, the AUD is positively correlated with the GBP, that’s why we should take into consideration the Brexit process as well. No good news from that side: there is only one month left to the deadline, and both sides seem to be far away from reaching a compromise.
On the other hand, the aussie is a risk-sensitive currency. When something happens in the market, it’s one of the first ones to react. If widespread vaccinations really start next month, we’ll see the rise of riskier assets, and especially, the AUD.
“While there are downside risks to AUD in the near term, the medium-term outlook is very positive because of China’s V-shaped economic recovery. We now forecast AUD/USD will end 2020 at 0.74 (previously 0.75) and end 2021 at 0.78 (unchanged).
An improved outlook for the global economy is behind our slightly stronger AUD forecasts in 2022."
Actually, the performance of the AUD has been astonishing so far. On the weekly chart, we see loads more green candles than red ones, which means there are a lot of bulls on the market that are ready to push the price higher. On the other hand, we see that AUD/USD has approached the key resistance of 0.7400. So, it’s unlikely to break this strong level as it has failed to cross it so far. That’s why we may observe a pullback soon.
Now, let’s look at the daily chart to have a better view. If the price bounces off 0.7400 and falls, it will meet the support of 0.7260. The move below it will drive the pair to the low of November 12 at 0.7210. In the opposite scenario, if the price finally manages to move above 0.7400, it may rise further to the next round number of 0.7500. Follow further news and catch the market flow!
Despite the negative news and worrying headlines, we recommend traders to make mental reframing of the situation. This way, you can look at the market from a different perspective. Let’s observe how you can take advantage of the uncertainties and make the fundamentals work for you!
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