- The AUD/USD rallied a bit during the trading session on Friday, as we reached the 200-Day EMA area yet again.
- We have not been able to break above it, but we are most certainly in that neighborhood.
- Ultimately, this is a situation where you continue to see a lot of upward pressure based upon the idea of interest rates dropping in the United States, but the question now becomes what will happen after the Federal Reserve meeting next week?
Looking at this chart, if we were to break above the 200-Day EMA, you are still technically in the up-trending channel, so you do need to keep in mind that you need to break above that trendline as well. If we can break above there, the market then opens the possibility of a move to the 0.70 level. The 0.70 level is an area that a lot of people will pay close attention to as well, as it is a large, round, psychologically significant figure. With this being the case, I think we’ve got a situation where it favors the outside, but that can change in a heartbeat if we get some type of major “risk off move.”
Waiting for a Bigger Move
If we see the market turnaround after the Federal Reserve meeting, that could be yet. We could have just seen the high and the rally. It’ll be interesting to see all this plays out, but I do think that we have a situation where things are going to become more volatile, not less, especially as we are getting close to the end of the year and a lack of liquidity. Ultimately, this is a situation where you can see a lot of potentials, but right now it looks like we are compressing before a bigger move.
The question now is whether we are going to have enough volume late in the year to get this market moving, or if we just simply are going to bounce around to kill time between now and New Year’s Day. I think the potential is high that this might be one of the bigger bins, mainly since the Australian dollar is highly sensitive to China, which is now trying to reopen. That’s a fluid situation as well, so if you are going to see a noisy pair, is probably going to be this one.
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