Australian Dollar vs US Dollar Technical Analysis
The Aussie dollar has kind of just hung out in the same area that we’ve been in all week, although it has been volatile, so what this tells me is that traders are trying to break out, they just don’t quite have the momentum yet. Part of that might be due to the fact that the CPI numbers had the markets all over the place on Tuesday, and now we have to pay attention to the PPI numbers, which could have the same effect, we just don’t know. Keep in mind that those inflation numbers out of the United States will move the dollar, and that’s the biggest part of the equation here.
The Australian dollar itself is highly levered to commodity markets and, of course, global growth, and therefore you need to pay attention to what’s going on around the world. The Australian economy itself, almost like an afterthought because basically, what people pay attention to is whether or not the Chinese are doing well, whether or not people are trading commodities in huge quantities, and of course, whether or not demand is going to pick up.
From a technical analysis standpoint, the 0.6650 level is an area that has offered pretty tough resistance. And underneath, we have the 200-day EMA offering support. From a longer-term perspective, at least at this point in time, there is massive support down at 0.6450, which is the bottom of a consolidation block that I have marked on the chart. Whether or not that actually gets tested again remains to be seen, but we are very choppy and very volatile, so therefore you do have to be cautious.
That being said, if we were to break above the Friday candlestick from last week, that could be a very bullish sign for the Aussie but right now it looks like we’re struggling to do so. In general, I think you will continue to see a lot of noisy behavior and a lot of nonsensical trading in the short term. With this, if you are short-term trader, it might be good for range bound trading, but anything more than that would be a bit difficult in this environment.
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This article was originally posted on FX Empire