AUD/USD Weekly Price Forecast – Australian dollar continues to underperform
The Australian economy is highly levered to the Chinese markets, and of course the production of goods in that country. Australia is a major provider of commodities for China and its expansion as well as the export of goods, so it’s obvious that if the Chinese markets continue to crumble, it makes sense that the Aussie struggles. The 0.70 level underneath is structural support, and if we can break down below there, the market will then reach to the 0.68 level underneath. That’s an area that has been massive support in the past, so it’s very likely that we are going to find buyers in that general vicinity.
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At this point, I think it’s probably best to short this market every time it rallies, at least on the short-term charts. As far as the weekly chart is concerned we are most certainly oversold but until we get some type of difference coming from the USD/China relations, I just don’t see how the Aussie picks up. Beyond that, we have a lot of “risk off” factors around the world anyway, which of course favors the US dollar overall. With that, I think this market will eventually break down below the 0.70 level, and once we get a daily close below there I think the weekly traders will continue to push lower. In fact, it’s possible that the 0.68 level doesn’t even hold given enough time. We need some type of good news coming from China for the Aussie to pick up.