The Aussie dollar has fallen rather hard during the trading session again on Thursday as we continue to see money flow away from Asia, and into bonds in America. Australia continues to close down its own economy, which of course does wonders for growth. (Sarcasm implied.) That being said, we are well below the 0.72 level at the end of the day, and it now looks like it is only a matter of time before we fall towards the 0.70 level underneath which has been my target for some time.
Even if we were to rally from here, I anticipate that the 0.72 level as well as the 0.73 level should offer plenty of resistance, so given enough time I would wait for signs of exhaustion to start selling again, as the market will continue to favor the greenback due to the fact that the bond market has been attracting a lot of attention, and of course the biggest headline to cross the wires as of late has been that the Federal Reserve is likely to taper, and if that is going to be the case and it should signify that bond yields in America start to pick back up, thereby having more money flow towards those yields.
The market will now target the previously mentioned 0.70 level, which is an area that should be crucial from a longer-term standpoint. However, if we were to break down below that level it is likely that we go much lower. Ultimately, the 0.70 level being broken to the downside could be a huge turnaround just waiting to happen, as we may have gotten far ahead of ourselves after the massive spike higher that had occurred earlier in the year. After all, the narrative of the global economy certainly taking off after being locked down the way it was is starting to come apart at the seams, and therefore it makes quite a bit of sense that we would see a little bit of reality reenter the picture.
As far as buying is concerned, I do not have a scenario in which I would be doing so, at least not until we take out the 0.74 level, which obviously is not going to happen in the next trading day or so. On the other hand, if we do see a massive supportive candlestick at the 0.70 level, it could be the beginning of a turnaround, but even then, I would be cautious.
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