The Australian dollar initially gapped lower on Monday, as the news was digested by the currency markets that a new war has broken out involving the Americans, Israelis, and Iranians.
AUD/USD
The Australian dollar initially gapped lower on Monday, which of course is not a huge surprise considering just how shocking the attack in Iran and the subsequent reactions have been. But what I find interesting is that the market doesn't seem to be falling apart. It's worth noting that it is just chopping back and forth on short-term charts, and I think this shows just how much danger and quite frankly confusion there is here.
The reason I'm featuring this currency pair is because it's a little different than many others in the sense that the Reserve Bank of Australia has a plan at least at this point to raise rates. That is a huge boon if you will and positive influence on the Australian dollar. In fact, even if the US dollar strengthens, I suspect this one will fare better than many other currencies, as we had seen earlier with the Euro and the British pound.
Key Technical Levels and Market Drivers
Whether or not that sticks we'll have to wait and see, but the 0.7150 level is an area I'm looking very closely at with the Aussie dollar. You can see that it has held for a while. The 0.6950 level underneath I think is your support level, especially with the 50-day EMA coming up.
I like the idea of buying dips, at least until we break down below 0.69. So far it has worked. Short-term traders will continue to be going long here whenever they get the opportunity. The question is: can we make a bigger move? Unfortunately, part of what will drive this is probably going to be random headlines out of the Middle East and you never know when that takes hold.