Selling trading ideas
- Set Sell AUD/USD and set Take Profit order at 0.6300.
- Set the stop loss order at 0.6500.
- Schedule: a day or two.
Buy trading ideas
- Set Buy Stop at 0.6470 and Take Profit at 0.6600.
- Set the stop loss order at 0.6350.
The AUDUSD price continued its downtrend as the ongoing selling gained momentum. It collapsed as low as 0.6447, the lowest since May 1, 2020. The pair has crashed more than 11% this year.
The rise in the US dollar index
The price of the Australian dollar against the US dollar continued to decline as the US dollar index continued its upward trend. The index rose to $114 for the first time in more than two decades as the dollar rose against most currencies. The rally occurred when the closely watched Fear and Greed Index dropped to 25 while the VIX rose to $34.
The US dollar’s rally continued after hawkish comments by Federal Reserve officials. In a statement over the weekend, Rafael Bostic said he supports a tougher stance against inflation. The same sentiment was echoed by Susan Collins, the new head of the Federal Reserve Bank of Boston. She said fighting inflation would require slow job growth and further tightening.
The currency pair will react to a statement from Jerome Powell followed by important economic data from the US. Jerome Powell is likely to repeat what he said last week when the bank decided to raise interest rates by 0.75%. He also hinted that it will rise by 0.75% in November and 0.50% in December.
The currency pair will also react to important economic data from the US. The Conference Board will publish the latest consumer confidence data. Economists expect the data to show that consumer confidence jumped to 104.5 in August.
Meanwhile, the Australian dollar also collapsed against the US dollar after the Organization for Economic Co-operation and Development (OECD) cut its forecast for the Australian economy. The Rich Nations Club estimates that the Australian economy will grow by 2% from the previous 2.5%. It expects the economy to slow by 2.2% in 2023.
AUD/USD trading forecast
The 4 hour chart shows that the AUDUSD has been in a strong bearish trend in the past few weeks. It managed to move below the key support level at 0.6665, which was the low on September 16th.
The pair moved below the lower side of the Bollinger Bands while the MACD and the Relative Strength Index (RSI) collapsed. The pair is likely to continue falling as risks to the global economy remain high.
If this happens, the next major support level to watch will be at 0.6300. The stop loss for this trade will be at 0.6550.