- The AUD/USD currency pair has pulled back from the crucial 0.65 level, an area that I think will continue to be very important.
- Ultimately, this is a market that I think also is not only paying attention to the 0.65 level, but where the 50-Day EMA is going.
- Because of this, I think it’s probably only a matter of time before we see sellers come back into the market on short-term rallies, as the 0.65 level is not only an area where we have seen noise previously, but also a large, round, psychologically significant figure.
Bearish Asian Markets and Commodities Affect the Aussie
Ultimately, when you look at this chart, you can see that we are in a massive downturn, and in that I believe we have a scenario where the market will continue to be very noisy but will continue to see plenty of concerns around the world affecting what happens with the Aussie dollar, and perhaps more directly, the US dollar.
Keep in mind that the Australian dollar is highly sensitive to commodities, and of course everything that’s going on in Asia. Right now, the Chinese economy is a bit difficult to get a handle on, as we see lockdowns still occasionally cause major issues. Look at this chart, you can see that it was very bullish during most of the session, but it certainly looks as if we are going to struggle to continue going higher. The market will have to figure out risk appetite, but right now it looks like the overall risk appetite is rather bullish for the short term. Longer term though, we stop the worry about inflation, and what happens with the Federal Reserve.
Speaking of the Federal Reserve, the Bank of Canada raised interest rates by 50 basis points on Wednesday, instead of the expected 75. This has people dreaming that the Federal Reserve is going to follow suit, but that’s probably a stretch of the imagination at best. After all, the Federal Reserve has been very clear about what is going to do, and therefore I think it’s a bit of a stretch to imagine that they are suddenly going to change their decision based upon what’s going on in Canada. Quite frankly, Canada has a lot of housing issues to begin with, as the bubble is starting to pop.
Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.