AUD/USD Price Forecast – Australian Dollar Looking Tired

The Australian dollar has pulled back a bit during the trading session on Friday as we had broken so strongly to the upside on Thursday. At this point, it looks as if the Australian dollar is starting to pull back a bit though, which would be expected after major breakout. Beyond that, we also have to worry about the risk appetite around the world, which is starting to sour due to the Brexit situation looking very much like a “no deal Brexit” is coming.

AUD/USD Video 14.12.20

More likely a direct effect on this market is probably felt due to the fact that stimulus talks in America seem to be going nowhere suddenly, as the runoff election in the Georgia Senate seats will continue to keep things tense between the Republicans and the Democrats. Remember, the Australian dollar is highly levered to commodities so people will use it as a way to play the idea of the reflation trade, as commodities will be highly desirable in a rebuilding stage of the economy.

Looking at the technical analysis, the 50 day EMA is now above the 0.7250 level but looking at this chart it is likely to see plenty of support before we even get to that level. I think that a pullback and then a continuation to the upside makes quite a bit of sense, as we have seen the Australian dollar outperform most other currencies around the world. If we get a resolution to the stimulus talks in the United States, that will probably be the “magic bullet” to send this pair much higher. With that being said, this is a market that looks as if it is a little bit tired in the short term.

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