Forecast as AUD Crashes (Chart)
Bullish view
- Purchase the AUD/USD pair and set a take-profit at 0.6100.
- Add a stop-loss at 0.5950.
- Timeline: 1-2 days.
Bearish view
- Promote the AUD/USD pair and set a take-profit at 0.5950.
- Add a stop-loss at 0.6100.
The Australian greenback crashed to its lowest stage since March 2020 as buyers rushed to the protection of the US greenback as geopolitical dangers rose. The AUD/USD pair plunged to a low of 0.5988, down by over 13% from its December highs.
Australian greenback crashes
The AUD/USD pair plunged after Donald Trump introduced his ‘reciprocal’ tariffs on imported items delivered to the US. These tariffs will apply to all items shipped to the nation from all international locations.,
Australia was one of many luckiest main international locations because the US will apply solely the minimal tariff determine of 10%. Nevertheless, the US can even levy China a 34% tariff on high of the opposite levies Trump introduced earlier this 12 months.
The Australian greenback is usually seen as a proxy for China due to the massive volumes of commerce that it sells to the nation. Its high exports are iron ore, petroleum gasoline, coal, and different minerals. Due to this fact, indicators that the Chinese language financial system is slowing are sometimes bearish factor for the Aussie.
The AUD/USD pair additionally dropped after Jerome Powell, the pinnacle of the Federal Reserve warned concerning the US financial system as he dominated out rate of interest cuts. In an announcement, he mentioned that the US risked shifting into stagflation, a interval characterised by excessive inflation and sluggish financial progress.
Powell commented this after Trump pressured him to chop rates of interest because the inventory market plunged.
Trying forward, the highest catalyst for the AUD/USD might be from the US, the place Trump and his officers might sign willingness to barter with different international locations. Additionally, the pair will react to the upcoming US inflation information and Federal Reserve minutes.
AUD/USD technical evaluation
The AUD/USD alternate charge crashed to a low of 0.5988, its lowest stage in years. On the each day chart, it crashed under the essential help stage at 0.6087, its lowest stage on February 3.
The pair has crashed under all shifting averages. Additionally, all oscillators just like the Relative Energy Index (RSI) and the MACD indicators have all pointed downwards, with the RSI testing the oversold stage.
The AUD/USD pair additionally retested the acute overshoot of the Murrey Math Traces device. Due to this fact, the more than likely state of affairs is the place it bounces again to the final word help at 0.6100. Such a rebound can be a useless cat bounce, the place an asset in a freefall has a brief bounce after which resumes the downtrend.
