- The AUD/USD has fallen significantly during the trading session on Thursday as we continue to see a lot of negativities.
- We broke down below the 0.63 level at one point but then turned around to show signs of life.
- Ultimately, this is a market that I think continues to see negativity, due to the idea that the Reserve Bank of Australia recently raised interest rates by much less than anticipated, and of course, Australians must worry about a housing market.
The 50-Day EMA sits just above the 0.65 level, which is a large, round, psychologically significant figure, and an area where we had seen selling pressure previously. If we were to break above there, then it could open the possibility of a bigger move, perhaps reaching to the 0.67 level. That’s very unlikely though, as the market has been very negative for quite some time and decisively so. Furthermore, the Federal Reserve has reiterated its hawkish stance, and therefore there’s no reason to think that anything has changed.
Expecting Volatility
Rallies at this point will be an opportunity to pick up “GPS dollars”, showing signs of exhaustion. Every time this market looks tired, I will be shorting it, because I do believe that we are going to go down to the 0.62 level underneath. The 0.62 level is an area where we have seen the market bounce from previously, so if we were to break through that area, it’s likely that the Aussie dollar drops down to the 0.60 level. Ultimately, this is a market that also is highly influenced by the Chinese mainland, and the Asian markets. Beyond that, the market also must pay close attention to commodity demand, which will almost certainly be slumping because the world is about to go into a global recession.
I would expect a lot of volatility as the Friday session is going to feature the Non-Farm Payroll report, so if we get some type of knee-jerk reaction to the upside, I will be looking for signs of exhaustion that I can start fading as a longer-term trend is so firmly ensconced and is nowhere near rolling over anytime soon. Ultimately, this is a market that has been noisy, and that type of volatility does not normally lead to risk taking.
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