- The AUD/USD attempted to rally during Wednesday's trading session, reaching the 200-Day EMA.
- However, the market has been trading within a 200-point range between the 0.68 level at the top and the 0.68 level at the bottom for some time.
- As such, this appears to be a simple matter of consolidation, with the 50-Day EMA sitting at the 0.67 level, showing potential "fair value" in the middle of the range.
However, the Australian dollar is likely to be very noisy, given the recent surprise interest rate hike in Australia, combined with the drop in global demand for commodities. As such, this market could be a great risk barometer, and traders will need to pay close attention to it.
If the market can break above the 0.68 level on a daily close, it would clear the resistance barrier that the market has been in recently, as well as the 200-Day EMA, potentially allowing the market to move towards the 0.70 level. On the other hand, if the market breaks down below the 0.66 level, it could potentially rip through important support, opening the possibility of a move down to the 0.64 level.
Pay Attention to the Key Levels of Support
Overall, this is a market that has seen a lot of range-bound behavior, and traders will likely be attracted to it as we try to sort things out. However, with the global economic slowdown looming, it makes sense that the US dollar will become more attractive to traders if economic concerns continue. As such, while the range-bound attitude is likely to continue for now, it's important to pay attention to any potential breakout in either direction, as it could signal where the Australian dollar is headed next.
In conclusion, the Australian dollar has been trading within a 200-point range between the 0.68 level at the top and the 0.68 level at the bottom for some time, showing consolidation in the market. However, given the recent surprise interest rate hike in Australia and the drop in global demand for commodities, this market could be a great risk barometer. Traders will need to pay close attention to the key levels of support and resistance, as a breakout in either direction could signal where the Australian dollar is headed next. It is likely to continue seeing a lot of noise.
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