- The AUD/USD has fallen a bit to kick off the trading week, and we are seeing a resumption of the longer-term trend in favor of the US dollar.
- More of a “risk off” attitude has prevailed during the last couple of days, which of course does not bode well for the Aussie in general.
- There is a significant amount of support just below that a lot of people will be paying attention to.
- Because of this, it’s probably worth noting that the 50-Day EMA sits at roughly 0.6537, and of course, the 0.65 level underneath there had been important multiple times. The question now is whether “market memory” comes back into the picture.
At this point, I suspect that a pullback was needed. If we break down below the 0.65 level, then it’s very likely that we will continue to see a lot of negative pressure. This will be especially true if interest rates in America continue to pick up, because they had given the market a bit of a reprieve as of late.
I Remain Bearish
Keep in mind that the Australian dollar is highly leveraged to the Chinese mainland and of course the commodity markets overall. Fresh Chinese lockdown school coursework against the value of the Australian dollar, as China is by far Australia’s biggest customer. In this environment, it’ll be interesting to see how this plays out, especially with the RBA looking more likely than not to slow down its pace of tightening.
There is a potential shift in the attitude of traders, getting away from central banks and focusing on the underlying economies. If that does into being the case, by far, the United States will be the favorite currency as well. With this, I remain bearish, but I also recognize there’s a significant amount of support just below.
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