The Australian dollar attempted to rally against the USD during the trading session on Friday, but ultimately showed signs of exhaustion, forming a bit of a shooting star. While there is significant support underneath, we may experience a noisy couple of days, which is nothing new to the Aussie. In fact, the Australian dollar continues to see a lot of noise in general, and therefore the next couple of days could be very difficult. Nonetheless, I still favor the downside overall as the amount of potential trouble is still rather high around the world and therefore one would assume that sooner or later we would see a run back to the US dollar.
AUD/USD Technical Outlook
- The 0.67 level has been an area of resistance multiple times, and it's likely to continue to be important.
- Looking at the chart, we could drop to the 0.66 level, where we have seen support previously.
- If we break below that level, it could open the door to even more negativity and result in a more vicious selloff.
The Australian dollar is highly sensitive to global growth and commodities as Australia is a major exporter of hard commodities. Thus, this market is a barometer of people's feelings about global growth and whether central banks will continue to raise rates. Keep in mind that Australian dollar is going to continue to be noisy, as there are so many questions about China and the global economy.
It's not until we break above the 0.68 level that there could be any real strength in the Aussie. This would break through the 50-Day EMA and the cluster of trading from a couple of weeks ago. However, this level is likely to give a lot of headaches to buyers, so traders should look for signs of exhaustion to sell, just as we saw on Friday.
Higher interest rates in America continue to make the dollar more attractive, which further limits the potential for significant gains in the Aussie. Ultimately, it's possible that we may see a major breakdown in the Australian dollar, although the exact timing and nature of this event are uncertain.
Overall, traders should approach the Australian dollar market with caution, as it is highly sensitive to global trends and can be prone to fluctuations. The key resistance and support levels should be monitored closely, and traders should be prepared to adjust their trading strategies based on changing market conditions.
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