AUDUSD recently made a strong break below support at the .9250 minor psychological level, indicating that further losses could be in the cards for the pair. However, price has bottomed out near the .9100 major psychological support and may be due for a correction before resuming its currency market drop.
Using the Fibonacci retracement tool on the latest swing high at .9400 to the swing low near .9100 shows that the .9250 broken support zone lines up with the 50% Fibonacci retracement level. Stochastic is moving up for now, indicating that there’s enough currency market buying pressure to lead to a pullback to .9250.
The 61.8% Fibonacci retracement level lines up with the .9300 major psychological handle, which might also act as strong resistance in case price pulls up a little higher. Meanwhile, the 38.2% Fibonacci retracement level might also keep gains in check if the currency market correction is shallow.
AUDUSD Currency Market Forecast
A break below the pair’s previous lows at .9100 could signify a stronger downtrend, which could take AUDUSD down to the .9000 major psychological support zone. On the other hand, a rally past the Fib levels could show that a currency market reversal might take place and push AUDUSD to the previous highs at .9400 and beyond.
Employment data from Australia came in stronger than expected for the month of August, leading AUD bulls back in the currency market. Employment change picked up by 121K versus the 10.3K estimate, pushing the jobless rate down from 6.4% to 6.1% and leading to currency market gains for AUDUSD. However, these rallies might be subdued once they reach the .9250 area of interest.
Risk sentiment still favors the lower-yielding dollar for now, as the FOMC is widely expected to start considering tightening policy. As for the RBA, Stevens already emphasized that they are not looking to alter policy anytime soon.
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