- The AUD/USD rallied a bit during the trading session on Wednesday but continues to struggle above the 0.67 level.
- This is a currency pair that continues to see a lot of consolidation more than anything else, so it does suggest that we are going to have to make a bigger decision rather soon.
- If we get an impulsive candlestick, it could lead the way for the next several weeks as we close out the year.
Keep in mind that the 200-Day EMA sits above, near the 0.6850 level, it is offering a bit of a barrier to the upside. On the downside, we have the 0.66 area and the 50-Day EMA, both of which could cause a little bit of a headache for sellers. As we consolidate in this area between those 2 indicators, it should not be a huge surprise that we are in fact somewhat sideways.
Expect Trouble
This is an area where you would expect to see some trouble, as it previously had been supported, and therefore it makes a certain amount of sense that there would be “market memory” in this area. Keep in mind that the Australian dollar selloff had been quite brutal, but at this point in time in order for the Aussie dollar to strengthen significantly, you would have to ignore the Reserve Bank of Australia and the fact that it raised interest rates less than anticipated, perhaps suggesting that it was going to ease its monetary policy much sooner than we originally thought.
On the other side of the equation, you have the Federal Reserve which remains very tight with monetary policy, even if they are going to start slowing down the rate of hikes. After all, if they hang on to tight monetary policy for longer than anticipated, that’s essentially the same thing as tightening monetary policy, especially if the rest of the world starts to go back into quantitative easing. Beyond all that, you also have to keep in mind that the Australian dollar is highly levered to the commodities market, which will need strong global demand to make this currency be in demand. Beyond that, you also have to keep in mind that the Aussie dollar is highly levered to China, which of course continues to go through its zero Covid policy, locking the economy down randomly.
Ready to trade our daily Forex forecast? Here’s a list of some of the best Forex brokers to check out.