- The AUD/USD currency pair went back and forth Wednesday
- The pair continues to dance around the crucial 0.68 level.
- It’s likely that we will end up seeing further downside pressure.
- The Australian dollar is highly levered to the commodity markets, and you need to pay attention to what’s going on in those markets to get an idea of what’s going to go on in this market.
Time to Start Shorting?
As you know, commodities have been getting slaughtered as of late, so that is not going to help the Aussie anytime soon. I believe at this point it’s likely that rallies will get sold into, especially near the 0.69 level, which is an area that has been significant support previously and should now have a bit of “market memory” attached to it. In other words, I would anticipate a lot of selling pressure. At the first signs of exhaustion near that level, I will not hesitate to start shorting the Aussie.
If we break down below the bottom of the lows over the last week, it’s likely that we will continue to see the US dollar strengthen quite drastically, driving the AUD/USD pair down to the 0.67 handle. They break down below that level and could open up even more aggressive shorting, sending this market down to the 0.65 level. Ultimately, I don’t have any interest in buying this market anytime soon as the Aussie is limp, despite the fact that there was a surprise interest rate hike from the Reserve Bank of Australia just a couple of days ago.
The 50-day EMA sits just above the 0.70 level, and I think that would be the absolute “ceiling in the trend.” Because of this, the market is likely to respect that as a very difficult barrier to overcome, and I don’t think that it will happen. However, if it did, then you would have to pay close attention to this market because I think at that point, we could go to the 0.72 level. The 0.72 level is an area that currently features the 200-day EMA, so you should pay close attention to it. Ultimately, I prefer the US dollar against almost all currencies, this one included.
