Currently, the market is primarily focused on the US dollar and interest rates in America, so traders should keep an eye on these factors.
- In Friday’s trading session, the AUD/USD attempted to rally but ultimately fell significantly, showing continued weakness.
- The global market remains concerned about overall growth and is starting to accept the idea that the Federal Reserve will keep interest rates high for longer than expected, despite their prior announcements.
- This sudden change in monetary policy has left many uncertain about how to navigate the market.
Looking at the technical analysis, the 0.67 level appears to be a critical support level, as it is a round and psychologically significant figure that has previously shown volatility. In the short term, rallies may offer selling opportunities, as the market appears to lack direction. The 200-Day EMA is currently around the 0.69 level, and the 50-Day EMA is about to break below.
Recently, the market experienced a significant pullback from the 50% Fibonacci level, after an impressive rally from the 0.62 level. It seems that a longer-term downtrend may be reasserting itself, although this may take time. It’s not a process that will happen overnight, but it may be an area of interest in the future. With, every time this market rallies I look at that as a potential selling opportunity as I do think we eventually get down to that area.
As for buying, it’s best to wait until the market breaks above the 0.69 level at the very least, and then take a closer look at the overall fundamental picture to make an informed decision. Currently, the market is primarily focused on the US dollar and interest rates in America, so traders should keep an eye on these factors. Of most interest will be the futures markets for the 10-year and 2-year notes. As long as those rates continue to rise, there’s no real reason to believe that the Aussie will do well against the greenback. That being said, it has been a very noisy market over the last several months, so one would have to assume that there will continue to be a lot of volatility going forward. With this, I like the idea of taking advantage of “cheap US dollars” every time we rally.
The Australian dollar has a correlation to the Chinese mainland, but right now it’s likely that we see the Chinese reopening Peter out a bit, as it has been against the backdrop of the global slowdown.
