AUD/USD Price Forecast – Australian Dollar Breaks Through Support

The Australian dollar has broken down from the 50 day EMA during trading on Thursday, slicing through the 0.71 handle. Ultimately, the market is looking towards the 0.70 level underneath, an area that of course is a large, round, psychologically significant figure and will attract a lot of attention. Ultimately though, I think the 0.70 level will be crucial for a longer-term move, and therefore we should be looking at it through the prism of a potential major breakdown.

AUD/USD Video 16.10.20

What is truly interesting is that we also have the 200 day EMA racing towards that level, and therefore I think that the dynamic support will come into play as well. If we break down below the 200 day EMA then the absolute “bottom will fall out” of this market typically and could send the Australian dollar down to the 0.65 handle. Quite frankly, this is a market that is going to be based more on China than anything else, and although China is strengthening it appears that most of China’s customers are not. Furthermore, the RBA suggested that interest-rate cuts were coming in Australia due to employment issues. With that being the case, makes quite a bit of sense that the highflying Aussie dollar may find itself in serious trouble.

Keep an eye on the 0.70 level, because it is an area that will attract a lot of attention in general, and a lot of big funds will have to look at this through the prism of being a major figure and a lot of stop losses and options barriers will probably be found in this area as well. As stimulus looks to be less and less likely out of the United States, at least in the short term, we are starting to see the greenback strengthen as well.

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