AUD/USD Forecast: Aussie Continues to See Downward Pressure – 28 February 2023
Keep your position size reasonable and make sure that you exit negative trades rather quickly as they can turn against you quite rapidly.
During Monday’s trading session, the AUD/USD currency pair fell to touch the crucial 0.67 level, indicating that the currency is likely to experience further negativity. This is not surprising given that the global economy appears to be slowing down. The Australian dollar is highly sensitive to global growth as the Australian economy relies heavily on mainland China and commodity trading in general. As long as there are concerns of a global slowdown, the Aussie is likely to struggle. Additionally, the 50-Day EMA is starting to roll over, which could result in a negative technical indicator known as a “death cross” as it breaks down below the 200-Day EMA.
Despite this, there is a significant amount of support in the 0.67 area, which could lead to a short-term bounce.However, this would likely cause many traders to short the Aussie again, to take advantage of “cheap US dollars.”If the currency falls below the noise just below the 0.67 level, it could reach the 0.6450 level over time.
On the other hand, if the market breaks out above the moving averages, it could reach the 0.70 level, a large, round, and psychologically significant figure that has seen a lot of selling recently. However, this pullback is quite significant and could lead to further selling if there is more “risk off behavior” around the world. Regardless of what happens next, we are at an inflection point, and therefore, it is likely that we will see a lot of choppy and noisy trading in this general area.
The outlook for the Australian dollar remains bearish, and the recent decline in the currency is likely to continue as long as global growth remains a concern. The ongoing trade tensions between the US and China have also contributed to the bearish outlook. The Reserve Bank of Australia has signaled that it is prepared to cut interest rates further, if necessary, which would put additional pressure on the currency. In the short term, the Australian dollar could experience some volatility, but the overall trend is likely to be negative. Traders should be prepared for choppy and noisy trading as the market tries to find direction in this inflection point. With that in mind, keep your position size reasonable and of course make sure that you exit negative trades rather quickly as they can turn against you quite rapidly.
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