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US Dollar Price Forecast: USD/CAD & AUD/USD Offer Bearish Opportunities

US Dollar Price Forecast: USD/CAD & AUD/USD Offer Bearish Opportunities

2019-10-24 21:00:00
Peter Hanks, Analyst
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US Dollar Price Forecast:

US Dollar Price Forecast: USD/CAD & AUD/USD Offer Bearish Opportunities

The US Dollar has had a rough October, with the Dollar Basket (DXY) falling from 99.67 to 97.66 at the time of writing. The persistent bearishness has pressured DXY to test the 200-day moving average around 97.40 and should the basket break beneath support, it could open the door to further losses for the greenback. In turn, such a development could translate to further gains for the Canadian Dollar.

USD/CAD Price Forecast

The Canadian Dollar has been on a tear amidst the recent bout of USD weakness, as USD/CAD has slipped from resistance at 1.3350 to support at 1.3075 in October to date. Now, grasping to confluent support around the current trading price, continued Dollar weakness could pave the way for further CAD gains – given that support around 1.3020 can be taken out.

USD/CAD Price Chart: Daily Time Frame (December 2018 – October 2019) (Chart 1)

USDCAD Daily Price Chart

In July, the area offered robust support and effectively stalled the pair’s 2-month decline. Therefore, another test of the zone could allow for bears to breakthrough and open the door for deeper losses – offering an attractive risk-reward profile. An area of invalidation for this trade resides roughly around September’s swing low at 1.3145

AUD/USD Price Forecast

While USD weakness has been widespread, AUD/USD has been one pair that has largely trailed the gains of other major pairs versus the greenback due to its troubled fundamental backdrop. Nevertheless, the Australian Dollar enjoyed a modest rebound in October and is now within reach of the 200-day moving average and a descending trendline from late 2018. Together, the two technical levels – residing around 0.6910 - will look to offer staunch resistance to a continuation higher and their confluence could offer an intriguing short opportunity that is not necessarily contingent on USD strength, but waning AUD strength.

AUD/USD Price Chart: Daily Time Frame (December 2018 – October 2019) (Chart 2)

AUDUSD Daily Price Chart

Therefore, an area of invalidation for this trade idea coincides with the confluent resistance around 0.6910. Conversely, 0.6750 and 0.6700 will act as areas of interest, with a break beneath the former signaling bearish appetite for a test of the latter. As price action unfolds, follow @PeterHanksFX on Twitter for updates and analysis on these trades. Further evidence for my bearish bias on both pairs is included in the video above, where I use IG Client Sentiment Data to analyze developing trends in USD/CAD and AUD/USD.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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