If the market breaks below the 0.67 level, it’s possible that the Australian dollar could decline to the 0.66 handles, and potentially even lower to the 0.64 or 0.62 level.
- During Tuesday’s trading session, the AUD/USD continued to fall, following a similar trend on Monday.
- However, it’s likely that there will be a slight bounce due to the strong support level at 0.67. This could prompt buyers to enter the market to capitalize on the perceived value, while sellers may also decide to take profit around this level. Because of this, I would anticipate more choppy behavior.
- The question at this point is whether or not we get a significant bounce, or if we are to simply write back and forth in order to settle trades.
If the market breaks below the 0.67 level, it’s possible that the Australian dollar could decline to the 0.66 handles, and potentially even lower to the 0.64 or 0.62 level. It’s worth noting that the Australian economy is closely tied to China’s economic performance, as it’s a significant exporter of hard commodities such as gold and iron. This means that the country needs global growth to thrive, and the recent volatility in the market has been challenging for Australia. If Australia is thought of as a commodity currency, it will struggle right along with others such as the New Zealand dollar and the Canadian dollar.
Although China’s reopening has provided some hope, the charts show that this has not been enough to reverse the downward pressure on the Australian dollar. The 200-Day EMA is located around the 0.6850 level, along with the 50-Day EMA. Looking at the longer-term chart, the Australian dollar has tested the 50% Fibonacci level but has failed significantly, leading to concerns about overall downward pressure. Furthermore, the Federal Reserve’s tight monetary policy may lead to a global recession, which could further impact commodity currencies like the Australian dollar.
In such an environment, short-term rallies may present opportunities for selling, as the downward pressure is likely to persist. However, traders may still be tempted to enter the market for a quick profit in the next day or two. Given the current market conditions, it’s essential to remain cautious and focus on implementing appropriate risk management strategies to minimize exposure to potential losses. After all, it has been a market environment where there’s been a lot of shocks to the system, so if that does in fact end up being the case over the next couple of days, we could see a violent move.