- The Australian dollar initially did pull back just a bit during the trading session here on Wednesday as unlike so many others, this has been a quiet market.
- But when you look at things, you can see that we are hanging around the crucial 50 day EMA, which almost always seems to attract a certain amount of attention.
- So, with that, I think you’ve got a scenario where we really aren’t ready to go anywhere yet.
Although I do recognize that this is an interesting pair to watch, mainly because we’ve seen the US dollar beaten up by so many different currencies, except this one. So that tells you just how weak the Australian dollar may end up being, as the US dollar has been like a punching bag as of late.
Australia is China. Sort Of.
Ultimately, the Australian dollar is highly levered to the Chinese economy and of course commodity markets on the whole. So, because of this, you do need to be somewhat cautious and recognize that we have a situation where this is going to move back and forth with risk appetite. The 0.62 level underneath is significant support while 0.64 above is significant resistance.
As we are basically right in the middle of this range, you could think of it somewhat as being fair value, if that’s the case, then there’s not much to do, but I would watch these two levels because they will determine where the next 200 pips come from and then more importantly, in what direction. The US dollar is oversold against quite a few other currencies. So, if we do see other currencies such as the Euro and the British pound give up some of the momentum, one would have to assume that the Australian dollar might find itself in trouble rather quickly.
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