- The Aussie continues to see a lot of noise, as the market fell hard overnight.
- The Aussie has struggled due to not only the CPI numbers in Australia missing by 0.2%, which makes a lot of sense to bring it down.
- Also, the RBNZ sounded less hawkish that people thought, and a lot of the time, the AUD will follow the NZD and vice versa.
AUD/USD Continues to Make Noise in a Box
Looking at the Australian dollar, we have tested the 0.65 level, as you can see. We also have a question about whether or not purchasers will return once the Americans join the market. Having said that, the 0.6450 levels represent the lowest point in the zone we have been in overall due to consolidation.
Therefore, if we go down there, it will be interesting to see how the market responds. When all else is equal, there is a lot of support for this market. Therefore, I wouldn't be surprised in the slightest if the market generally declined. Having said that, both the 200-day EMA and the 50-day EMA above have provided resistance.
The Reserve Bank of New Zealand's remark that they believed interest rates were about where they needed to be may have contributed to part of the overnight decline. This comment went against the consensus, as most people assumed that New Zealand was going to hike rates shortly. Naturally, Australia, and the Australian dollar in particular, has a tendency to move in unison. It is precisely because of this established link that the AUD/NZD currency pair frequently exhibits high volatility.
For instance, the Australian dollar dropped sharply last night together with the New Zealand dollar. Having said that, not much has changed, so we now have to wonder what the Federal Reserve will do this year. This year, I believe the FX markets will be quite choppy, and I don't see why the Australian dollar would be any different. Remember that the Chinese economy, which attracts a lot of attention, has an influence on the Australian economy. If China does well, the Australian economy does well, and vice versa. Since it is a commodity currency as well, you must likewise monitor those markets. However, as things stand, I just believe that we are testing for support, which, given enough time, I think will most likely hold.
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