- The AUD/USD has rallied a bit during the trading session on Wednesday, hanging onto the wedge that we have been in for the last couple of weeks.
- At this point, the market looks as if it is trying to figure out whether not to go dollar-positive, or dollar negative.
- With that being the case, I think you’re going to see a lot of noisy behavior, so it’s worth noting that there is pressure in both directions.
At this point, the market is likely to continue to see a lot of volatility, especially as the Federal Reserve has a major meeting next week. We have a lot of concerns about inflation, and therefore the US dollar will continue to be very noisy. It’s also worth noting that recently we have seen some very disastrous economic signs, so it will certainly way upon the Australian dollar as it is highly levered to the commodity markets and of course the Asian markets, especially such ones as China.
Upward Pressure Ahead
The 50-Day EMA under the should own for support, right around the 0.66 level. I think now it’s worth noting that the market breaking down below there would attract a lot of attention and could open up a move down to the 0.65 level. On the other hand, the market is likely to see a lot of resistance above at the 200-Day EMA, right around the 0.6850 level. Breaking above there would obviously be a very bullish site, but the action that we have seen over the last couple of days does suggest that there is a lot of pressure from the outside coming down on the market.
A lot of what we are seeing now is noisy and erratic behavior, but I do think that it is more likely than not will continue to see this in decisions. Ultimately, this is a situation where we see upward pressure overall, but one thing that I would point out is that we had recently rallied quite significantly, and now are starting to get choppier. It typically means there’s somewhat indecisive momentum out there, and that can lead to the market rolling over again. However, if we can get a daily close above the 200-Day EMA, I suspect that people will be out there chasing the market to the upside.
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