Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6380.
- Add a stop-loss at 0.6620.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6567 and a take-profit at 0.6690.
- Add a stop-loss at 0.6450.
The AUD/USD pair continued crashing amid a strong US dollar and rising worries of the global economy. It dropped to a low of 0.6530, which was the lowest level since 2020. It has also fallen by about 10% this year.
US dollar index strength
The AUD/USD price continued falling on Monday morning, continuing a trend that has been going on for months. This decline happened as the US dollar continued its unstoppable bull run and as the fear and greed index crashed to 24.
The US dollar has surged to the highest level in more than two decades as it rose against key currencies like the euro, sterling, and Swiss franc. This happened as global risks rose and after the Federal Reserve continued hiking interest rates.
On Wednesday, President Putin of Russia raised stakes in his ongoing war in Ukraine. He escalated the crisis by ordering 300k more troops to Ukraine and warned about nuclear weapons.
On the same day, the Federal Reserve concluded its two-day meeting and delivered the third straight 0.75% rate hike. The accompanying dot plot showed that officials were expecting that the tightening phase will continue in the coming months. They expect that the bank will hike by another 125 basis points this year.
The AUD/USD pair also dropped as concerns about the global economy continued. Economists expect that the economy will sink to a recession in the coming months as interest rates keep rising. As a result, the prices of key commodities have dropped.
The closely watched Bloomberg Commodity Index has dropped to the lowest level in months. Brent and West Texas Intermediate Oil crashed to $85 and $79, respectively. Copper and iron ore prices have continued falling recently. The Australian dollar is often seen as a proxy for the global economy because of the vast amount of commodities that it sells.
AUD/USD forecast
The Australian dollar continued falling on Monday. It managed to move below the important support level at 0.6683, which was the lower side of the inverted cup and handle pattern. It has moved below all moving averages. At the same time, the Relative Strength Index (RSI) and the MACD have continued dropping.
The pair has moved to the second support of the standard pivot point. Therefore, it will likely continue falling as sellers target the third support at 0.6380. A move above the resistance at 0.6620 will invalidate the bearish view.
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