AUDUSD continues to trade sideways and is having problems to establish a trend. The AUDUSD is being supported by the idea that the US central bank is about to cut rates to support the US economy, while the AUDUSD is also under pressure as the RBA is also in an easing mode. Looking beyond the near-term price action, the AUDUSD trend has been bearish since 2018, when the currency peaked at 0.8139.
If the US economy continues to struggle, and so does the Chinese economy, it is likely that the AUDUSD will remain under pressure and could revisit its 2019 low. However, we are getting conflicting signals, as an example, Iron ore prices, which is probably Australia’s most significant export product, has seen a price rise of about 63% in 2019. Stock markets are also very upbeat and are not suggesting that a global slowdown is imminent.
The short-term technical outlooks remain bullish, and the price looks to have carved out an inverse head and shoulders pattern, with a target of 0.7247 on a break to the July high of 0.7049, however, I would be carefully trading this pattern hard, given the overall downtrend. A more solid macro economic outlook would also simply trading, but it does not look like this will happen anytime soon.
For more on the RBA, read: RBA Ready To Cut Again if NeededDon’t miss a beat! Follow us on Twitter.