- During Monday's trading session, the Australian dollar rallied, breaking above the 50-Day EMA, near the 0.69 level.
- The 0.69 level has been crucial more than once, so it's not surprising that we are seeing noise there.
- Breaking above the moving average also caused some downward pressure, and now the market is trying to determine its longer-term move.
Aussie Highly Correlated to Commodities Market
Traders should keep in mind that the Australian dollar is highly levered to commodities and the idea of global growth. With China reopening, there is hope, but the global economy itself looks a bit shaky. The market had recently rallied to the 50% Fibonacci level, only to start selling off drastically. These impulsive candlesticks above may continue to weigh heavily upon the market, especially if commodities lose some steam.
Traders should pay close attention to the hammer from Friday's trading session because if the Australian dollar were to break down below that level, it would be a serious breach of support. Not only would we be breaking down below the hammer, but also the 200-Day EMA, which is an indicator that will attract a lot of attention from systematic traders. To the upside, the 0.70 level will continue to be a bit of a ceiling since it's psychologically important, and we have seen a lot of action in that area.
It's worth noting that inflation is still an issue in both Australia and the United States. Thus, the interest rate situation between the two currencies may not be as clear as others. However, as a general rule, the dollar tends to move in one direction against all currencies. Traders can pay attention to multiple currency pairs and notice the overall direction of the dollar to trade this market.
In summary
The Australian dollar rallied during Monday's trading session, breaking above the 50-Day EMA. The 0.69 level has been significant, and the market is trying to determine its longer-term move. Traders should keep in mind that the Australian dollar is highly levered to commodities and the idea of global growth. They should also pay attention to the hammer from Friday's trading session, which is a crucial support level. The 0.70 level will continue to be a ceiling. Inflation is still an issue in both Australia and the United States, so traders should monitor the overall direction of the dollar to trade this market.
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