Bearish View
- Sell the AUD/USD pair and set a take-profit at 0.6150.
- Add a stop-loss at 0.6325.
- Timeline: 1-2 days.
Bullish View
- Buy the AUD/USD pair and set a take-profit at 0.6325.
- Add a stop-loss at 0.6150.
The Australian dollar has continued its downward trend as it fell for five consecutive weeks, reaching its lowest level since October 2022. The AUD/USD pair was trading at 0.6217, much lower than the year-to-date high of 0.6935.
Top Forex Brokers
This decline happened mostly because of the strength of the US dollar, which has jumped to its highest level since 2022. The greenback has been boosted by the strength of the American economy, which has largely avoided a hard landing as most analysts expected. Estimates are that the US will grow by 2.5% in 2024 and continue the momentum in the new year.
On the other hand, Australia is seeing sluggish growth because of the ongoing softness in China and the decline in commodity prices. Key commodities like coal and iron ore have dropped this year as concerns about China continued.
Analysts expect that the Reserve Bank of Australia (RBA) will be more dovish in 2025 after maintaining status quo in 2024. Minutes released last week pointed to a potential cut in the first quarter, possibly in February.
The Federal Reserve, on the other hand, has slashed interest rates by 1% this year to between 4.25% and 4.50%. As inflation concerns remain, it has hinted that it will deliver just two cuts in 2025, lower than the previous guidance of four.
The AUD/USD pair will likely remain under pressure this week as the low-volume situation continues. Most institutional investors are remaining away from the market because of the Christmas and New Year holidays.
AUD/USD Technical Analysis
The AUD/USD pair has been in a freefall after peaking at 0.6935 in a freefall after peaking at 0.6935 in September. It has dropped in all but one weeks since then. The pair has moved below the 50-week moving average and the key support levels at 0.6348 (August 5 lows) and 0.6272 (October 23rd low).
It is now hovering near the key support level of 0.6200, its lowest level since 2022. The Relative Strength Index (RSI) and the MACD have also pointed downwards. Therefore, the pair will likely continue falling as sellers target the next point, 0.6100. The stop-loss of this trade will be at 0.6350.
Ready to trade our free trading signals? We’ve made a list of the top forex brokers in Australia for you to check out.