The Aussie dollar fell hard on Thursday, only to bounce again, as we are reacting to rates yet again.
The Aussie dollar has been all over the place during the trading session on Thursday as rates jumped in America in reaction to the Donald Trump address to the nation. But really, we've seen a complete turnaround in risk appetite during the session as traders are looking past some of the initial reactions in Asia, which was really kind of surprising.
It really didn't say anything different than he's been saying for 3 days now. Perhaps the adults came back into the room when New York opened and now, we're seeing a resumption of the action that was going on previously.
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That being said, you have to pay close attention to the 10-year yield in America; the 4.3 level is your flip, if you will. Once we break down below there, it becomes pretty risk on, or even if we're close to it. Yields did jump pretty significantly during the early part of the session and that's part of what had people buying the dollar.
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We are stabilizing and we're heading into a long weekend with Good Friday being a major holiday. I think it makes sense that the Australian dollar finds itself near the 0.69 level. This is an area that's been important multiple times. The question is will people look at this as a potential liquidity grab on the way back up into the consolidation area, or do we break down below the 0.6850 level? If we do, that opens up a move down to the 200-day EMA.
The Reserve Bank of Australia is one of the few that have been hiking as of late, so it does add some resiliency to the Aussie. That being said, risk premium is a major problem right now with the war in the Middle East continuing.
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