2021-10-25 • Updated
The aussie is expected to plummet for the next six months. What is the reason?
AUD/USD has been dipping for 5 days in a row. That hasn’t happened since the coronavirus outbreak at the beginning of March. "We see scope for AUD/USD to pullback," claimed analysts from Rabobank. The Australian dollar has been rising for almost half a year, driven by the optimistic prospects on recovery and the steady rebound in Chinese economic activity.
However, investors’ enthusiasm has waned these days as new virus cases have started rising again and therefore the recovery will take more time than initially expected. Moreover, there are loads more factors except a risk-off sentiment that also weigh on the overall sentiment, undermining riskier currencies like the aussie. Among them are the uncertainty over the US presidential elections in November, the impasse of the US fiscal stimulus, and, of course, US-China tensions.
Elsewhere, the Reserve Bank of Australia is interested in depreciation of the national currency to boost exports. The RBA also mentioned that lower rates would "definitely be beneficial for the Australian economy". Those prospects by themselves have already pushed the aussie to the downside. Traders eagerly await the RBA statement on October 6 for more clarity.
AUD/USD has been plummeting since Friday. It has even broken down the six-month uptrend and also the significant support of 0.7150. Therefore, the way towards the next support of 0.7000 at the 100-day moving average is clear. If it manages to cross it, the pair may drop to the next support of 0.6920, which it failed to break in early July. Resistance levels are 0.7150 and 0.7200.
Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts.
When I started trading stocks a few years ago, I often needed to pay more attention to my technical analysis skills and trust that the market would play fair according to my analysis. I have since discovered that the safer approach to trading stocks is to, more often than not, seek out investing opportunities - that is, catching stock commodities with a potential to rise.
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Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
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