- The AUD/USD has rallied to test the 0.65 level during trading on Monday, which is also the top of the overall range that we have been in.
- Ultimately, this is a market that I think you need to keep an eye on, because it could give you a bit of a “heads up” as to what risk appetite is doing.
- While it has been a somewhat relentless bullish day during the trading session on Monday, the reality is that we have not changed anything, and it looks like we are going to continue to see a lot of back and forth.
Even if we were to break above the 0.65 level, I think there is plenty of reason to believe that there is even more resistance near the 0.67 level. The 0.67 level is an area where it has been supported in the past, and I think that continues to be what people pay attention to as a certain amount of “market memory” should come back into play. Ultimately, this is a market that also must deal with the fact that the commodity markets are not exactly bullish as well.
Noise Ahead
This is the type of market that I think will continue to be very noisy, but it should favor the US dollar over the longer term since there is so much fear out there. Furthermore, the Federal Reserve continues to tighten monetary policy, so one would have to believe that it is only a matter time before we see further downward pressure on anything that is not the US dollar.
We did get a less than expected Manufacturing PMI number coming out of the United States during the day, and I think that is part of what has seen this market rally a bit, as people are starting to speculate that the Federal Reserve may have to change monetary policy sooner than anticipated. This is complete nonsense but hope burns eternal for those looking for the Fed to bail them out. Ultimately, this is a market that I think continues to see a lot of volatility, but there is more downward pressure than up at this point, so it’s worth recognizing that we had recently broken for major support level, and that of course does tend to have follow-through when it happens.
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