- The AUD/USD soared into the stratosphere on Friday, catching traders off guard with its unexpected rally.
- This abrupt surge was triggered by the release of weaker-than-expected job data from the United States.
- In the wake of this bullish momentum, the AUD faces a pivotal juncture as it confronts a major resistance level, having shot upwards for three consecutive days.
Yet, amidst the euphoria, there lurks a sense of caution. The possibility of market exhaustion looms large, casting a shadow on this rapid ascent. Should exhaustion take hold, there is a distinct likelihood that the AUD could experience a downward plunge, potentially descending to the 0.64 level.
Conversely, if the AUD manages to break free from its current constraints and head northward, it will encounter the formidable 200-Day Exponential Moving Average as its next significant hurdle, closely followed by the 0.66 level. At that juncture, a substantial trend shift could be possible. However, I also think that we will have to see what happens on Monday, as the markets will continue to focus on geopolitical issues.
Presently, while the market exudes bullish sentiment, it's essential to recognize the precarious position we find ourselves in. We stand atop a well-defined trading range, demanding a vigilant eye on this critical juncture. A potential sell-off could prompt me to take a short position, but a breakout to the upside would necessitate a gradual shift in strategy towards building a long position.
The Trend Favors a Recovery Attempt
Much of this market dynamics hinges on the Federal Reserve's monetary policy. Speculation abounds that the central bank may expedite its easing measures, although the current market climate is characterized by rapid, short-lived trends, often lasting only a day or two. Remarkably, computer-driven algorithms now dictate over 90% of all trading activity, amplifying market volatility.
Looking ahead, the weekend holds the potential for further surprises. Any adverse news developments could send the AUD into a tailspin. Conversely, an unexpected surge to the upside should not be dismissed lightly. Given the historically low levels, there is a certain favorability towards a potential recovery attempt. Nonetheless, the actualization of such an outcome remains uncertain, especially in light of several currencies testing critical resistance levels. A seismic shift in the forex landscape may be on the horizon, heralding significant movements for the US dollar across global currency markets.
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