The Australian dollar continues to see a lot of chop in general, as traders are looking to see where ceasefire headlines lead us.
The Australian dollar has been choppy during trading on Thursday as we try to sort out whether or not we can continue the massive momentum that we had seen enter the market over the last couple of days.
Quite frankly, I think we're in a bit of a wait and see mode on the ceasefire and what that will do with risk appetite.
Ultimately, the AUD/USD market does see a significant amount of resistance at the 0.7150 level above, an area that has been a massive ceiling multiple time. Pullbacks at this juncture I think offer buying opportunities near the 50-day EMA, which coincides nicely with a previous area of importance in the form of 0.6950. Anything underneath there opens up another 100-pip drop.
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Interest Rate Situation in America
Ultimately, the interest rate situation in America is what you should be watching more than anything else as the US 10-year yields are right around the crucial 4.30 level. I think as long as we hang around here and don't get clear separation between bullish and bearish pressure in the bond market, it's difficult for Australian dollar traders to truly gauge the risk out there.
We are right in the middle of a previous consolidation area and that should not be lost on you either. This is a market that is essentially where fair value was for the last 6 weeks or so until recently. So, we may just hang out in this area waiting to see what happens with the talks in Islamabad between the Americans and the Iranians and what the reaction might be on Monday.
Friday could be a very quiet day or could be an explosive one just depending on what type of headlines we get. It is worth noting that at the 0.7150 level I see a massive amount of resistance.
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