- The AUD/USD initially tried to rally on Friday, bolstered by a cooler than anticipated jobs number coming out of the United States.
- The initial reaction was that the Federal Reserve may have to do less tightening than originally thought, but by the time noon came around in New York trading, the US dollar started to search higher yet again.
- The liquidity may have been a little bit suspect as well, as we are heading into a three-day weekend in the United States.
Keep in mind that the Monday session will be somewhat illiquid, so we may have a bit of an erratic market. Because of this, I think we have a situation where the market may be susceptible to sudden moves, but it will be interesting to see how Asia opens because we have seen this move after most of those traders will have gone home for the weekend.
Noise Ahead
The true liquidity will reenter the market on Tuesday as New York banks will come online at that point as well. Between now and then, I would expect a lot of noisy behavior, but it’s obvious that this is still a very bearish market. If that’s the case, I look at rallies and selling opportunities, but I will be the first to admit that I thought the rally during the day on Friday would have at least a little bit more staying power. Because of this, it’s obvious that the market does not trust any risk on rally, and I think that’s probably going to continue to be the case. Furthermore, keep in mind that next week is when a lot of larger traders will enter the market after being gone on holiday for the summer, so the moves could be quite interesting to say the least.
The 50 Day EMA sits just above the 0.69 level and is starting to turn aggressively lower. Because of this, I think it’s very likely that we will see that act as dynamic resistance. Because of that, I believe the 0.69 level will be your short-term ceiling in the market. Any break above there opens the possibility of a run to the 0.70 level, but I think that’s probably about as good as the Aussie is going to get in the near term.
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