When I look at the AUD/USD pair, this is a market that is trying to break higher, although we have been a bit overdone recently. This is a US dollar story more than anything else.
Top Regulated Brokers
AUD/USD
During the month of August, we've seen the Australian dollar rally quite nicely against the US dollar as it looks like the US dollar itself is on the back foot. Traders around the world continue to look at this through the prism of the Federal Reserve, possibly looking to cut rates, or at the very least sit still.
Ultimately, this is a market that, as we are closing out in the month of August, we are trying to break out to a fresh new high. The market is likely to continue to see upward momentum if the narrative of a looser Federal Reserve continues. That being said, we are a little stretched, so a pullback makes sense as well. After all, we can’t go straight up in the air forever, a pullback will make the Aussie dollar more attractive to those who have missed the initial rally.
Consolidation and Potential Breakout Levels
If the market were to pull back a bit, then I think value hunters might be interested. At this point, we are consolidating after a massive move to the upside, and with interest rates in America being high, but not getting worse, I think that's part of what's going on here as well.
It's not until we break down below the 0.69 level that I look at this as a bearish market. In other words, this is much like the gold market in the sense that I think it has gotten a little bit ahead of itself, but that doesn't mean that I need to try to pick the top. That would be a great way to lose money, and I certainly don't want to do that.
On the other hand, if we were to break above the 0.73 level, that would be a very bullish sign, showing a breakout that perhaps a lot of FOMO traders would step into the market and start chasing. This is likely to be accompanied by a lot of US dollar selling around the world, so this should be an obvious situation that we would find ourselves in. However, there are a lot of “moving pieces” out there at the moment, and therefore it is a very fluid situation at the moment.
Ready to trade our monthly forex forecast? Here’s a list of some of the best Forex trading platforms to check out