- In the recent trading session, the Australian dollar demonstrated a slight upward momentum, testing a previous resistance zone.
- Specifically, the 0.67 level appears to exert a certain attraction on price movements, residing midway within the broader range between 0.65 and 0.69.
- Consequently, our stance on this currency pair is decidedly neutral.
One might argue that the 50% Fibonacci retracement level has maintained its significance since the upward break. However, presently, greater attention is likely being directed towards the 50-day Exponential Moving Average, which acts as a key reference point below the aforementioned support. The 50-day EMA holds significance for a substantial portion of market participants.
Recent developments have witnessed the occurrence of what is commonly referred to as the "Golden Cross." This transpired as the 50-day EMA crossed above the 200-day EMA, signifying a longer-term bullish signal. Nonetheless, it is crucial to acknowledge that this signal arrived relatively late and has since coincided with a sustained decline in the currency pair's value.
Bond Markets
Monitoring the bond markets and observing shifts in American yields is advisable. Upcoming events, such as the release of the consumer price index on Thursday and the producer price index on Friday, are likely to introduce volatility into the US dollar's performance. Currently, the pair's movement hinges on these impending developments, and until then, a holding pattern prevails. It is equally imperative to keep a vigilant eye on two other factors: risk appetite and Asian market dynamics.
While the AUD/USD tends to exhibit considerable volatility, it serves as a valuable instrument for gauging overall risk sentiment. Australia's strong reliance on commodities means that its currency performs well during periods of heightened risk appetite. Conversely, in times of risk aversion, the US dollar tends to gain strength as investors seek refuge in it.
At the end of the day, the Australian dollar's recent trading session suggests a retesting of previous resistance levels. The 0.67 level holds a pivotal position within the broader range of 0.65 to 0.69. The currency pair's current status is neutral, and market participants are keenly observing the 50-day EMA and the late-arriving Golden Cross signal. Upcoming US economic data releases are poised to introduce volatility, and risk appetite and Asian market dynamics will continue to exert influence. The Australian dollar remains a valuable barometer for risk sentiment, reflecting its close connection to the commodities market. In times of heightened risk aversion, the US dollar tends to be the preferred haven.
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