The Australian dollar initially tried to rally during the trading session on Friday, which was both Good Friday and Non-Farm Payroll Friday. That being said, it would have typically been a very wild day, but with it being a holiday there was a very significant lack of liquidity, so I would only read so much into the candlestick for the day. The market seems to have focused on an equilibrium between the open of both the Thursday and Friday sessions, which have been very choppy to say the least.
The hammer that formed for the Thursday session was not that surprising in hindsight, as a lot of people would have been unwinding positions before the Easter weekend. This is especially true as you had to not only worry about banks being closed, but the jobs number coming out during the same session. It now looks as if the 0.75 level underneath is going to be supportive, even if only by the psychology of the round figure. If we were to break down below there, then I think it opens up the possibility of a move towards the 200-day EMA underneath which is at roughly 0.74 currently.
Rallies at this point should be sold into unless we break above the 0.77 handle. Rallying towards that area would also break the 50-day EMA, which is something that a lot of traders will be paying attention to. I think at this point in time, the market is likely to see more of a sideways chop until we get some type of crucial move, which may be tied to yields in the United States. The 10-year yields did rise during the Friday session in shortened trading for the holiday, so that could continue to push the US dollar higher in value. At this point, I think it is very likely that we should see Monday as an interesting session, because it may give us a little bit of a “heads up” as to where we go next. We will finally get an opportunity for large banks to come in and react to the massive jobs number coming out of the United States, as the Americans added 916,000 jobs in the month of March. At this point, simply waiting to see which way we break is the best way to trade the market.
