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January 28, 2022

Why AUD Is Bearish Now

Frank Cabibi

Aussie pairs are heavily volatile today according to the heat map that suggests a bearish trend for the currency. Other than technical indicators, there are a few reasons as to why AUD is bearish now.

Lower Gold Prices

Investors now have a risk-aversive attitude towards the forex market and equities markets as they shift from Aussie to USD. Money is now being moved from the gold-heavy Australian economy to the "safe-haven" USD which will likely see higher interest yields in the coming months. WTI spot is up 1.20% and gold is down 0.78% on the day at the time of writing this.

Hawkish Fed

A hawkish Fed statement has brought a lot of demand towards the USD, and in turn has been hurting currencies who's countries are slower to the tighter monetary policy phase. Risk-off behavior has taken over the forex market as analysts are now expecting a rate hike by 125 basis points in this year alone, according to an FXStreet article.

This means that we could see a total of five individual hikes of 25 bp throughout the span of a year. If this expectation turns out to be true, Aussie would likely be bearish for a while.

AUD/USD

aud is bearish now
AU touches lower under support on the 1D chart as the sell off continues. Price is right on the support level now, but a lower low suggests a move lower to the 0.69200s.

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