AUDUSD is showing momentum in completing its impulse wave pattern on the long-term currency pair time frame. This could lead to a continuation of the bearish wave to the previous lows or perhaps to new ones.
Aussie sellers are back in action, as the pair made a more convincing break below the .9000 major psychological support level. This could be a sign that selling pressure is getting strong enough to take AUDUSD down to the key support area near the .8500 mark.
Currency Pair Forecast
Stochastic is already in the oversold area, indicating that buyers might jump in soon and trigger a market correction. For now, MACD still appears to have enough downside and is reflecting a continuation of the currency pair selloff.
A pullback might take place until the .9000-.9200 former support areas before AUDUSD resumes its drop. However, the retracement might be shallow as the recent FOMC statement has strongly renewed dollar demand. Bear in mind that Fed officials recently touched up on exit plans, which led to speculations of rate hikes for next year.
On the other hand, a sudden return of buying pressure for AUDUSD could lead to a climb past .9200, which might indicate that a reversal is in the cards. After all, the RBA reiterated its plans to avoid rate cuts as the housing price inflation could lead to asset price bubbles.
The slowdown in China is currently weighing on the currency pair, as the world’s second largest economy printed disappointing economic reports last week. This spells negative prospects for Australia’s exports and the currency pair price action, along with other commodity currencies.
A stronger drop could even lead to a break below the .8500 handle in completion of the bearish wave pattern, which might push the AUDUSD currency pair to new lows not seen in the past few years.
To contact the reporter of the story: Samuel Rae at email@example.com