- The Aussie dollar has risen to reach the 0.6450 level. During the trading session on Mondays, we continue to see a lot of noisy behavior.
- That does make a certain amount of sense because I suspect traders did not want to be short of the Aussie heading into the RBA decision in about 12 hours, maybe a little less.
- This will obviously be something that you will have to watch for the reaction of traders.
Short Covering? Probably.
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So, at this point in time, I think you're just seeing a little bit of short covering. I don't necessarily think that anything has changed. I would certainly look for signs of a rally that then show signs of exhaustion to get involved. At that point in time, I have absolutely no issue whatsoever in fading rallies that show signs of weakness.
In fact, it's really not until we break about the 50 day EMA near the 0.6560 level that I'd even remotely consider going long. The Australian economy is struggling a bit. The Asian economy most certainly is, and I think that's Australia's biggest problem. Then at the same time, we get inflation numbers on Wednesday and Thursday coming out of the United States, and that could move the needle as well as far as the dollar is concerned. Plenty of geopolitical issues also abound, so really, it's difficult to get very aggressive, short the US dollar
That doesn't mean that we can't rally. I just think these rallies end up opportunities to pick up some cheap greenbacks in what has been a very strong run for the US dollar and one that at least from the fundamental side, probably continues to see more momentum, the Federal Reserve may find itself in a situation where it cuts interest rates by 25 basis points in December as expected, and then has to stop.
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