- During Thursday's trading session, the Australian dollar made an initial attempt to rise, but it later started to exhibit symptoms of weakening.
- We are still very much in the midst of a consolidation phase, but at this point it just cannot hold on to the gains that it gets sometimes.
The Australian dollar US Dollar exchange made a brief attempt to rise during Thursday's trading session before giving up its gains. It seems likely that the market will remain extremely volatile and exhibit noisy behavior for some time to come. Having said that, I believe you also have a situation where you need to be aware of the fact that the Australian dollar is heavily tied to the Chinese and, by extension, Asian economy in general, meaning we need to keep an eye on developments there.
Reduction in Rates Coming from the Fed?
In addition, the Federal Reserve is expected to reduce rates this year, but it appears as though they may be holding back—we're not sure why. However, Wall Street and the other several large trading hubs undoubtedly got ahead of themselves. The PCE figures being released, which will undoubtedly influence our future direction. Having said all of that, I believe you need to consider the 0.65 level to be kind of a price magnet. That seems to be the case, in my opinion, and it makes perfect sense because the 0.65 level will be in a region where a lot of options trading occurs. It's important to remember, though, that the market has repeatedly broken past that barrier and is no longer behaving like a brick wall.
It's possible that we may reach the 0.63 level if we do break below the 0.6450 level. All other things being equal, I believe we either go sideways or we break down more likely than anything else. Having said that, the Aussie likely continues to be a fade the rally situation. If we rally from here, the 50 day EMA above is a major exponential moving average. The 200 day EMA follows that, and if we break above that then the 0.66 level comes into the picture. It should be noted that after the PCE numbers were released, the market turned around – but can it hold on? That remains to be seen in this environment.
Ready to trade our daily Forex forecast? Here’s some of the top Australian fast execution forex brokers to check out.