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The market is highly volatile, which is likely to continue to be a major issue for traders.
- The AUD/USD has shown signs of life in recent trading sessions, rallying around the 0.67 level.
- This level has been important multiple times in the past, and it remains to be seen how the market will play out in the current environment.
The Australian dollar is highly sensitive to risk appetite and global growth, so investors should pay close attention to both factors. The currency is also highly correlated with commodity markets, which will have a significant influence on the pair’s direction.
The 50-Day EMA sits near the 0.6225 level and is dropping significantly, while the market has found support near the 0.66 level. The market is highly volatile, which is likely to continue to be a major issue for traders. The recent breakdown below an uptrend line is also a technical factor that traders are likely to consider.
While breaking above this level could be a bullish sign, the market is expected to continue to experience a lot of noise. Therefore, position sizing is crucial, as volatility could pick up drastically. Keep in mind that the Aussie is often used as a proxy for Asian growth, and therefore you can see massive inflows at times, especially when Chinese economic figures hit the wires. While this has historically been a boon for the Australian economy, the last few years have been a mixed bag at best. It is also important to remember that the Reserve Bank of Australia chose to forgo rate hikes at the latest meeting.
It is worth noting that the longer-term trend on the monthly chart is negative. While the currency has bounced recently, there has also been a significant fall. If global fears of a slowdown come true, it is likely that we will see a continuation of the downward pressure on the Australian dollar. While it remains to be seen whether the market will buy into this scenario soon, it is a story that many investors are starting to think about, which could put further negativity into the currency.
Overall, the Australian dollar is likely to remain highly volatile, with concerns over global growth and risk appetite contributing to this uncertainty. Investors should pay close attention to commodity markets, technical analysis, and position sizing while being mindful of the currency’s longer-term negative trend. With careful analysis and strategic planning, investors can navigate these markets and capitalize on opportunities as they arise.
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