The Australian dollar has found a bit of buying pressure on Thursday, as traders are trying to determine the range in which we are going to be trading. This is a market that I think is setting up a few borders.
AUD/USD
The Australian dollar bounced slightly during the trading session on Thursday as the 0.70 level has offered a little bit of support. Ultimately, this is a market that looks like it is trying to find some type of consolidation area. And that does make a certain amount of sense because traders are trying to figure out whether or not the Federal Reserve will actually raise rates this year instead of cutting them.
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The inflation situation is a bit of a moving picture at the moment, and therefore, it's difficult to get your hands on what is more likely to happen next. Because of this, I think it makes sense that the Australian dollar is somewhat choppy. We are probably driving more or less based on the idea of the US dollar than anything else. The Australian dollar and gold correlation I suppose, is somewhat still intact because gold is falling.
Technical Support and Summer Seasonality
The 200-day EMA is sitting right around the 0.69 level, and I think that's your floor. To the upside, the 0.7150 level is considered to be a ceiling. All things being equal, this is a market that will be volatile, it will be choppy, and it will be I think, somewhat range-bound going forward. This is the most likely outcome of the lack of clarity we have in several key points.
Ultimately, the Australian dollar is probably in the process of trying to top out, but that doesn't mean that it will be very quickly. In fact, it could take a very long time, and furthermore, you have the seasonality of the summer being somewhat sideways, and maybe that's what we're drifting into.
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