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Andreas Zanin
Analysis | June 18, 2021

Outlook and forecast: AUD/USD

In recent posts, we have been heavily bullish on the USD and its made a big move up and we are looking for more strength and an attractive risk to reward trade for long term trend followers is AUD/USD. Our view of the fundamentals sentiment and technicals below.

The USD has seen broad-based strength as interest rate hikes have been bought forward by the Fed and we think it has more upside. In terms of the AUD, it’s heavily sensitive to commodity prices and while we have seen some weakness in commodity prices we expect far more particularly iron ore which is Australia’s main export.

Commodities to Fall and Pressure the AUD Lower

On the charts below, we can see the size of the speculative long position in commodities and also some weakness in the Blomberg Commodity Index, Copper and Gold against the US Dollar Index DXY. We expect more weakness in commodities as the large number of speculators exit on stop as the USD rises

The Most Important Commodity to Watch

The biggest export in terms of commodities from Australia by far is iron ore which accounts for over 45% of export revenue. The market has seen a huge rise as speculators have built up a huge long position but after an accelerated uptrend we are now expecting a big correction to the downside.

A stronger USD and lower commodity prices could send the AUD far lower from here and the key levels of support and resistance are clear on the weekly chart below – nearby support at 0.7600 has been broken major resistance on the upside is 0.7700 and the long term target is 0.7000.

 

Research provided by LearnCurrencyTradingOnline.com

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