- The Australian dollar continues to exhibit choppy behavior ahead of the FOMC decision, and it is worth noting key levels around 0.67.
- The analysis focuses on potential exhaustion, range-bound trading, and the prospect of a double top while emphasizing the importance of the upcoming press conference.
The Aussie dollar has been choppy during the trading session, which of course is not a huge surprise considering that we have the FOMC interest rate decision here in about four hours, as well as the press conference, which I think is actually what people really care about, giving us an idea as to where the Federal Reserve sees the economy going and what they are going to do about interest rates. With that, I am looking at this through the prism of a range-bound market, at least at the moment, and signs of exhaustion, I'm willing to sell any time we show a failure in this market, especially if it's close to the 0.67 level. The 0.6550 level would be my initial target, followed by 0.6450.
Key Breakout Consideration
If we do get a daily close above 0.67, then I think that is a big move to the upside just waiting to happen. And when I say big move, I'm thinking a couple hundred pips because this pair has done nothing for most of the year, really. So, the question now becomes, is this going to be a double top? We'll probably know by the end of the day or certainly by the end of the week, I think. And as I look at this chart, it does look a little stretched.
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So, I think it actually could be a currency that might be in a little bit of trouble if the US dollar strengthens just in the slightest. In other words, if it strengthens against the British pound and the euro a bit, it might strengthen quite a bit more here, and of course, the New Zealand dollar, which tends to follow right along as well.
So, I'm watching this for a potential short opportunity. We'll just have to wait and see how the end of the day shows directionality, but keep in mind it's about the press conference. If he starts using the phrase data dependent, that is probably US dollar positive.
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