- The AUD/USD rallied significantly during the trading session on Tuesday as the market reacted to the CPI numbers coming out at 7.1% in the United States year over year, as opposed to the expected 7.3%.
- A lot of traders have jumped all over the US dollar since the participants believe that the Federal Reserve is going to slow down its monetary policy situation.
- I don’t think that happens anytime soon, but it’s worth noting that the market has been grinding higher for a while anyway.
The Australian dollar has also broken above the 200-Day EMA, but it’s also worth noting that the market has pulled back from the top of the overall trending channel, so therefore I think it does make certain medicines that we are just kind of hanging around this area. The 200-Day EMA is a long-term technical indicator that a lot of people pay attention to, and as you can see on the longer-term chart, the 200-Day EMA has offered a bit of resistance multiple times, and therefore it is worth noting that we are right around that same area.
The Market Favors a Move to the Upside
Looking at this chart, you can see that we are also approaching the 0.69 level, which I think is the gateway to the 0.70 level. It’s worth noting that the Federal Reserve has a meeting on Wednesday, and that of course will have a lot to do with what happens next in the US dollar. This is not so much about the Aussie dollar, but more about the future direction of the Federal Reserve. We should get a little bit more of a head up as to where things are going by the end of the press conference, so the next 24 hours should be crucial.
If we break down below the uptrend in general, the market more likely than not will break down toward the 0.66 level, and perhaps lower than that. On the other hand, if the market can break above the 0.69 level, then it opens the possibility of a move to the 0.70 level. The way, I think we are about to get a move, so it’ll be interesting to see all this plays out. It’s obvious that the market favors a move to the upside, but Jerome Powell could kill everybody’s dream.
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