Australian Dollar Price Outlook: AUD/USD Sellers Drive into Support
AUD/USD Talking Points:
- The Australian Dollar has been mired in a sell-off for some time now, setting fresh decade-lows in early-August around the .6700 handle.
- An early-September retracement soon ran into resistance and sellers have come back over the past week. This keeps the pair as one of the more attractive long-USD scenarios ahead of the Q4 open.
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The late-Q3 impasse in the US Dollar continues to hold as the Greenback remains in a range despite a number of big drivers showing over the last couple of weeks. The European Central Bank rate decision and announcement of stimulus was unable to do it, as was the FOMC rate cut last week, and USD price action continues to trade within a rather tight band just underneath the fresh two-year-highs that were created earlier this month.
Next quarter looks to be particularly interesting: Will we have a repeat of the 2018 Q4 risk aversion theme, where US equities dipped by as much as 20% ahead of the Christmas holiday? Or, will the Fed take on a softer tone, helping to provide a boost of support across global markets? Given the two rate cuts that we’ve already had that answer might seem simple but, at this point, the FOMC hasn’t yet tipped their hand, which is likely leading into the build of this range ahead of the Q4 open.
Despite this seeming lack of near-term direction, the US Dollar has shown a rather clear recent trend against the Australian Dollar, threatening to push the pair further down for a test of the fresh decade lows that were set in early-August trade.
US Dollar Four-Hour Price Chart
AUD/USD Down-Trend Back in-Play, Can Sellers Take-Out .6700?
Heading into Q4, AUD/USD remains attractive for long-USD scenarios. The pair has been in varying forms of sell-off since January of 2018, and that theme hastened throughout this summer as Aussie sellers pushed AUD/USD down to fresh decade-lows. But it was around the .6700 level that bears met their match, and after considerable gyration near support in August, the pair showed a flicker of strength in early-September.
AUD/USD Weekly Price Chart
As looked at in the webinar two weeks ago, that retracement ran into resistance just inside of the .6900-handle; and sellers soon re-entered the picture as denoted by an aggressive sell-off last week that brought prices to support around .6760, which remains in-play ahead of the Q4 open.
If USD-strength is going to stick around next quarter, the short-side of AUD/USD remains as attractive, looking for those fresh decade lows that were set in August to come under fire. This will likely keep the pair as one of the more attractive long-USD venues until something changes.
AUD/USD Four-Hour Price Chart
To read more:
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.