- The AUD/USD has bounced from the 50-Day EMA again, showing resiliency.
- The market continues to dance around the 0.67 level, an area that I think will continue to be important, just as it had been in the past.
- Because of this, trading mostly through the prism of “market memory” as we should see a lot of noise out there that could come into the picture and give you headaches.
- The will markets have been very bullish until recently, and now it looks like we are simply slumping a bit. This, we could have more downward pressure, which is something that I do think comes into the picture eventually. After all, the Australian dollar is highly sensitive to risk appetite.
As the global economy slows, I look for the Aussie dollar to follow right along. After all, they are a major exporter of commodities, and if there is no global growth, there will be any real interest in Australian products. Further exacerbating their problems will be the fact that the Chinese continue to have major issues with the pandemic, which of course is something that will have an influence on where we go next.
Quantity Continues to be an Issue
As we head into the new year, this is going to be about risk appetite more than anything else, so we do need to pay close attention to that. The markets seem to be looking at the 50-Day EMA as a potential floor, and they should in fact remain so in the short term. If we were to break down below the lows of last week, that does open the possibility of a move down to the 0.65 level, which obviously has a lot of psychology attached to it as it is a large, round, psychologically significant figure. If we were to break it down below there, it’s possible that the Australian dollar drops back down to the 0.65 zero level., We can take out the heights of last week, which could open the Australian dollar all the way to 0.70 level, an area that’s had a lot of importance.
As we head into the new year, I think the quantity continues to be an issue and therefore you need to look at this through the prism of short-term choppy trading. I would not expect much more unless of course there was some type of announcement that came over the wires that shock the markets.
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