- The AUD/USD initially tried to rally during the trading session on Tuesday but gave back gains rather quickly as we continue to consolidate overall.
- It is probably worth noting that the Australian dollar is seemingly struggling with a 0.67 level overall.
- True, we continue to slice back and forth around it, but this is an area that previously had been a major support.
- The fact that we are struggling here suggests that a little bit of “market memory” could come back into the picture.
Underneath, the 50-Day EMA should offer a bit of support, so if we were to break down below there, then it’s likely that we could see this market fall significantly. At that point, you could see the Australian dollar to investigate the 0.65 level, which is an area that previously has been resistant. I would anticipate a bit of market memory in that general vicinity.
Be Cautious
On the upside, we have the 200-Day EMA hanging around the 0.69 level, so it does suggest that we could see selling pressure in that area. If we break above there, then it’s likely that we could see a major shift in attitude, perhaps sending the Odyssey to the 0.70 level. Ultimately, this is a market that is going to continue to be noisy as the Aussie is susceptible to pressures in the commodity markets, and of course, everything that’s going on in China. Ultimately, the market will continue to be very noisy, and I think that’s what you must count on. After all, this is a market that is highly driven by risk appetite overall, and that will be enough to make things a bit stir-crazy this week.
Keep in mind that the Core PCE numbers come out of the United States as we, which is the Federal Reserve’s favorite inflation measure. The jobs number on Friday of course has a major influence as well, but quite frankly I think at this point we must worry a lot about the overall risk profile of the global economy. The outlook is not very strong, at least not in the short term but it certainly looks as if we are in a very volatile place. Because of this, I’d be somewhat cautious, but I recognize that we are at a major inflection point and by the end of this week we might have a bit more clarity.
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