AUD/USD Forecast Dec. 23-30

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AUD/USD lost ground after the Federal Reserve announcement, but showed only modest losses on the week, closing at 0.8914. There are no releases this week. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The US dollar gained ground against the Australian dollar following the Fed announcement that it was tapering QE by $10 billion. The Aussie clawed back after weak US releases on Thursday, highlighted by disappointing Unemployment Claims.

Updates:

AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUD USD Forecast Dec. 23-27

*All times are GMT

AUD/USD Technical Analysis

AUD/USD started the week at 0.8950 and quickly hit the week’s high of 0.8970, as resistance at 0.9000 (discussed last week) remained in place. The pair then dropped sharply, falling to a low of 0.8820. The pair then moved higher, closing at 0.8914.

Live chart of AUD/USD:


Technical lines from top to bottom:

We begin with resistance at 0.9556. Next, 0.9428 was busy in the first half of October and is continues to provide strong resistance.

0.9283 saw a lot of action in the months of June and July, alternating between resistance and support roles. It has provided steady resistance since November.

0.9180 is the next line of resistance. It is followed by the round number of 0.9000, which held firm as AUD/USD moved higher early in the week.

0.8893 has been a strong support line since August 2010, when the Australian dollar put together a strong rally which saw it climb above the 1.10 line. It was briefly breached this week but remains intact. However, it is a weak line and could be tested if the Aussie resumes its downward trend.

0.8728 was last breached in July 2010, when the Australian dollar began an extended rally that saw it climb close to the 1.10 line.

0.8578 is the final support line for now.

I am bearish on AUD/USD.

The Fed taper is bullish for the US dollar, and the struggling Aussie could lose further ground as a result. As well, the RBA continues to say that the Australian dollar is overvalued and has left the door open for future interest cuts.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.