US Dollar Remains Bullish Amid Recession
- Recession concerns have prompted investors to seek the safety of the US dollar.
- AUD/USD has more downside potential.
- The pair is facing resistance in the charts.
Thursday’s AUD/USD forecast is bearish as recession worries push more investors into the safe haven dollar.
“At the end of the day, people who say the dollar is going to weaken because the market isn’t pricing in as many interest rate hikes from the Fed as before are forgetting that the dollar is also a safe haven. “said Jane Foley, head of FX strategy at Rabobank. .
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“If, by coincidence, we are looking at a potential recession in the Eurozone and the UK, and if global growth slows… what are you going to buy if you sell the dollar? »
The dollar will likely remain strong against most currencies in these uncertain times; therefore, the decline in AUD/USD is still significant.
Minutes from the June meeting showed a lot of concern that the continued rise in inflation would reduce confidence in the Fed’s ability to control it. For this reason, the bank continues to tighten its policy despite the risk of recession.
AUD/USD key events today
There won’t be any significant press releases from Australia today, so all the focus will be on the US. Investors will be watching how many people have filed for unemployment insurance for the first time over the past week. The first unemployment insurance claims indicate the state of unemployment in the United States and the state of the labor market in the face of rising interest rates.
Investors will also expect to hear speeches from Fed and FOMC members later today.
AUD/USD Technical Forecast: Resistance at the 30-SMA
On the 4-hour chart above, we can see the price at 30-SMA. This SMA acted as resistance on July 4 and June 30 and could also stop the bulls this time. AUD/USD is in a downtrend as it is trading below the 30-SMA and its RSI is slightly below 50.
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The 0.67615 is a strong support level, and the price tried three times to break below it but failed. If the SMA acts as resistance, we could see the price move to 0.67615 for another attempt to break below. However, if the SMA fails to hold as resistance, we could see price retesting 0.68843, which acted as resistance on July 4th.
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