- In the early hours of Tuesday, the Australian dollar first declined, but it later recovered and began to show signs of life once more.
- It appears that this means we will be seeing more of the same.
- At this point, I think that we might be setting up for a quiet year overall when it comes to the Forex markets, and the Aussie will not be any different as a result.
As you can see, the Australian dollar did somewhat weaken during Tuesday's early trading hours before rebounding to show some life. This will merely confirm what I've been saying for a while—that this couple simply has nowhere to go. Put differently, I believe we are witnessing a lot of the same senseless consolidation that has been going on for a while.
like will be a good representation of what I see in the currency market with many key pairs since it appears like central banks all over the world will need to loosen at some point this year. If that turns out to be the case, then all currencies will be playing the same old game of racing to the bottom. In such cases, nobody truly wins, and we have behavior like that.
The 50-day EMA and the 200-day EMA are shown above; many people will be observing these, but I believe that, with enough time, we may even reach a high of 0.66. The 0.6450 level and the 0.65 level are our next downside targets. The Australian dollar may be sold considerably more deeply and quickly if we were to breach below that level, which might allow the US dollar to strengthen to the 0.63 mark.
However, I believe there would need to be a widespread weakness in the US dollar before we could reach a level as high as 0.69 if the Australian dollar were to begin to strengthen and break over the 0.66 barrier. Ultimately, there is no compelling reason for the Australian currency to appreciate. Contrary to popular belief, there is no interest rate disparity, and the expansion of the world economy isn't particularly boosting the commodity markets. Of course, Australia is also greatly influenced by China. I believe that we simply continue in the same pattern that we have been following for a while.
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