We will see a lot of choppy and sideways behavior, meaning that you should probably be looking more or less at a range-bound type of trade.

• The AUD/USD currency pair pulled back a bit Tuesday to test the 0.70 level. 
• It should be noted that the 0.70 level has been important multiple times in the past, so it does make quite a bit of sense that the market would stall here.
• The question now is where we go from here, as this was the scene of a rather significant breakout.

The 0.70 level of course has a lot of psychology attached to it, so in and of itself is reason enough to think there might be some trouble. If we break down below the bottom of the candlestick for the trading session on Tuesday, then it’s likely that we go lower, perhaps reaching the 50-Day EMA. The 50-Day EMA is closer to the 0.6925 level, and of course, we have seen support at the 0.69 level previously. In other words, there is a lot of noise underneath that could come into the picture and keep the market somewhat elevated.

Tied to the US Dollar

At this point, it’s probably worth noting that the Australian dollar has fared better against the US dollar than many other currencies, so if we are going to see the US dollar selloff, it’s likely that we will see it get turned around here first. The market breaking above the 200 Day EMA above would be a very bullish sign, perhaps kicking off a new bullish trend.

We will have to be very cautious about that though because the Australian dollar is highly levered to China, which seems to have a lot of its own problems right now. Furthermore, we also have to worry about risk appetite in general, because the US dollar could pick up a bit of a bid if people start freaking out. I think more than anything else, we will see a lot of choppy and sideways behavior, meaning that you should probably be looking more or less at a range-bound type of trade. In the next 24 hours, it does look like we are going to deal with a little bit of support that could cause his market to bounce, albeit ever so slightly. This is a market that continues to see a lot of crosscurrents, but you can probably say that about almost every currency pair at the moment. Pay attention to the 10-year yield in America, because if it starts to rise again, that could send the Aussie lower.

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I think the only thing you can count on is seeing a lot of fake-outs in both directions.

• The AUD/USD currency pair has dropped rather heavily to kick off the week on Monday, slamming into the 0.70 level.
• This is an area that I will be watching very closely because it is a large, round, psychologically significant figure, and an area that I think a lot of people will be paying close attention to.
• We have seen a lot of support in that area in the past, right along with resistance.
• “Market memory” comes into play rather drastically in this general vicinity.

Risk Appetite May Cause Bullishness

The size of the candlestick is somewhat impressive, and therefore you need to take that into account. However, this is also a lot of noise underneath here so you also would have to assume that there will be people willing to get involved and try to pick up value in the Aussie if they are truly bullish on risk appetite. One of the main things that kicked this off during the Monday session was the fact that Chinese numbers came in rather lackluster. Retail sales missing by almost 3% does not bring in a lot of confidence when it comes to the Chinese economy. Remember, Australia is highly dependent on the Chinese economy, so if the Chinese economy does poorly, so will the Australian economy.

Underneath, we have the 50-day EMA, and that of course comes into the picture as well, as the market pays close attention to that quite often. The 0.6939 level is where it currently is, so breaking down below that will open up an attack on the 0.69 level, and then possibly breaking down below there to reach the lows again. I don’t know that it will happen easily, but it’s obvious that there is still plenty of volatility in the market, so you have to be very cautious on the whole.

If we were to break above the 200-day EMA, it opens up the possibility of a move above the 0.72 level, an area that has a certain amount of historical importance and of course psychology attached to it as well. Either way, I think the only thing you can count on is seeing a lot of fake-outs in both directions, and a lot of accounts destroyed in this pair as it has bucked the trend when it comes to how it behaves against the US dollar.

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I am looking for signs of exhaustion to get involved with and will continue to buy US dollars whenever I get the possibility to pick them up “on the cheap.”

• The AUD/USD currency pair has rallied rather significantly during the trading session on Monday, but as you can see, the market seems to be struggling with the 0.70 region.
• The 0.70 region is significant resistance that extends at least 50 points.
• I think that the market is going to continue to see a lot of noise due to the fact that there are concerns when it comes to global risk appetite.

Eventual Interest Likely

At this point, the 50-day EMA sits right in the middle of the candlestick for the session, so it does suggest that it is probably only a matter of time before we start seeing a lot of interest overall. If we were to break down below the 0.69 level, that opens up the possibility of the Australian dollar falling quite drastically. At that point, the market more likely than not will go down to the 0.67 level, which is an area that has offered up massive support in the past.

If we were to break down below there, it would almost certainly come down to a major turnaround in risk appetite and the US dollar strengthening against almost everything. With this being the case, the market is likely to enter a tailspin in almost anything close to being a risk appetite asset. Ultimately, the Australian dollar would have to clear the 0.7050 level on a daily close to making a strong statement, something that it has not been able to do since June. Because of this, I think it’s likely that we will continue to see a lot of selling pressure more than anything else. Because of this, I am looking for signs of exhaustion to get involved with and will continue to buy US dollars whenever I get the possibility to pick them up “on the cheap.”

If we do break out to the upside, the 200-day EMA is an area that we need to pay close attention to and breaking above that would obviously be a very bullish turn of events. However, I think it would take quite a bit of shift in momentum overall. I don’t expect that, so I think given enough time we will break down more than anything else. Whether or not we can break down below 0.67 is a completely different question as well.

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I’m looking for signs of exhaustion that tell me it’s time to start picking up “cheap US dollars” again.

The Australian dollar had a very tough session on Friday, breaking below the 0.68 level before finally recovering during the New York session. The Aussie dollar is highly levered to commodities, so this should not be a huge surprise as commodity markets have been taking a beating.

Commodities will continue to struggle as long as there are concerns about global growth, which is on the forefront of most traders’ minds. When trading the Australian dollar you should have an idea of what the gold market is doing, right along with aluminum, iron, and other hard minerals. Furthermore, you need to have an idea what’s going on in China as they are Australia’s biggest trading partner by far. With the Chinese seemingly hell-bent on locking themselves down at the first sign of a sneeze, it’s difficult to get a real read on the Chinese economy.

The Chinese have started to stimulate their economy, by whether or not that leads to any real change remains to be seen as major centers such as Shanghai continue to get locked down on occasion. This has a major influence on the Australian economy, as exports will get hammered in that situation. Furthermore, on the other side of this equation is the Federal Reserve and its monetary policy in the United States. It appears that the US is going to continue to tighten quite aggressively, and if that’s going to be the case I suspect that the Aussie, and most other currencies for that matter, are going to continue to have problems with the greenback.

The 0.69 level in the Australian dollar has been somewhat important recently, as will be 0.70 level be if we get to that area. I like fading rallies in this pair, and have no interest in buying the Australian dollar until it breaks about the 0.7250 level, something that would take a Herculean effort. Because of this, I’m looking for signs of exhaustion that tell me it’s time to start picking up “cheap US dollars” again. The size of the candlestick on Friday does tell us that there is a certain amount of conviction to the selling pressure, and I suspect that the only thing that saved the Aussie from falling apart quite drastically would have been the fact that the weekend was coming. Monday is Independence Day in the United States so liquidity could come into play as well.

The Australian dollar looked as if it was going to break down during the trading session on Thursday but turned around and bounced rather hard from the 0.6850 region. This is an area that has been crucial more than once, so it’s not a huge surprise to see a bit of support in this area. Whether or not this is a sustainable move is the real question, and I suspect that it is not.

The 0.70 level above should offer a significant amount of psychological and structural resistance, so somewhere between here and there, I will be looking for signs of exhaustion so that I can start selling again. Interest rates in America continue to climb, although it must be stated that the Thursday session was probably a bit out of bounds anyway, as it was “end of the month rebalancing” for US stock traders and large institutions.

That being said, the first signs of exhaustion between here and the effort mentioned 0.70 level, I am more than willing to start shorting. If we were to break above the 0.70 level, then I might step back and let the market bounce even higher before starting to short again. It is near the 0.7250 level that I would consider the trend may be changed, but only if we get a sustainable daily close above there. I think that the Australian dollar will continue to suffer at the hands of the commodity markets getting squeezed, as global growth is almost certainly going to dissipate. If that’s going to be the case, it’s very difficult to imagine a scenario where some of these commodity currencies will really start to take off.

Keep in mind that the Federal Reserve is hell-bent on taming inflation, meaning that they are not paying attention to most markets. In fact, some have even stated that they are “waiting for something to break.” I don’t think it will be the Australian dollar, but obviously, there will be a risk appetite component to whatever happens next. That will show up on this chart, as the Australian dollar is considered to be a “risky asset”, mainly because of its exposure to China and hard commodities in general. The US dollar is a “safe haven currency”, skewed than in the back of your mind as well. As long as there is fear and uncertainty, this market has a hard road ahead.

The pair will more likely than not continue to be choppy, so keep that in mind when putting money to work.

The Australian dollar initially tried to rally on Friday but gave bank gains as the inflation numbers in the United States came out much hotter than anticipated. At this point, it looks as if the Australian dollar is ready to continue going lower, perhaps testing the 0.70 level. The 0.70 level is an area that a lot of people will pay close attention to, as it is a large, round, psychologically significant figure.

If we were to break down below that level, then it’s likely that we could go looking to the 0.69 level, where we had bounced from previously. If we break down below there, then we could go even further. Ultimately, I do think that the Australian dollar will continue to be a bit soft, due to the fact that we are starting to see a lot of concerns when it comes to overall global growth, and the Chinese economy itself. That being said, the market is likely to continue to see a lot of volatility, because the Australian dollar is tied to some commodities that are starting to show signs of strength.

It’s also worth noting that the 50-day EMA and the 200-day EMA indicators have caused quite a bit of noise, and it makes sense that we would see a pullback from there. If the market were to turn around, I think we would need to take out the 200-day EMA in order to go higher. That would essentially be breaking above the 0.7250 level, something that looks a little unlikely at this point. That being said, you should also pay attention to the interest rates in the United States, because they continue to climb, and that’s obviously going to be a very bullish influence on the greenback.

If we get a “risk-off” type of situation, it’s likely that we will continue to see money running into the US dollar, as per usual due to the longer-term correlations. Unless the Federal Reserve decides to change its overall attitude, I think you have to look at rallies with a certain amount of suspicion and jump on signs of exhaustion every time you get the opportunity. The pair will more likely than not continue to be choppy, so keep that in mind when putting money to work.

It is likely that you will probably need to focus on shorter time frames.

The Australian dollar rallied on Monday to kick off the week and break above the 0.71 level. However, we have sold off quite drastically to show signs of hesitation later in the day, as we continue to see a lot of trouble. Ultimately, this is a market that I think given enough time will see sellers step back into the market and push things lower. After all, the Australian dollar has been in a downtrend for a while, so it does make sense that we would see a continuation of that.

At the first signs of exhaustion, which is something that we had seen during the day, I would be shorting this market. The 0.70 level underneath is a large, round, psychologically significant figure that people will pay close attention to and could cause a certain amount of noise in the market. If we were to break down below there, then I think we will probably have quite a bit of negativity getting ready to pile on.

Keep in mind that the Aussie dollar is highly levered to commodities and China. That being said, the market is likely to see a lot of concern in this kind of environment, and as a result, it is more likely than not going to be better served to fade short-term rallies. If we break down below the 0.70 level, then it is likely that we will go looking to much lower levels, perhaps down to the 0.68 level where we had bounced from previously. It is a situation in which I have no interest in buying, at least not until we break above the 0.72 level on a daily close at the very least. If we were to break above there, then we could go looking to reach the 200-day EMA. Clearing that level then allows the market to go looking for 0.75 after that.

Keep in mind that the US dollar has been strong against almost everything, so it does make sense that we will see that being the case here as well. In general, I think the one thing that you can keep in mind that we have seen is a lot of choppy behavior, and it is likely that you will probably need to focus on shorter time frames.

The overall attitude of the market is going with the rest of the currency markets, and that means that it is pro-dollar, and anti-just about anything else.

The Australian dollar initially tried to rally on Friday but gave back gains rather quickly. At this point, it looks like the Australian dollar is going to continue to find plenty of sellers, as the market has been extraordinarily negative. After all, the Federal Reserve remains very tight with monetary policy, so the US dollar should continue to be strong. After all, the interest rate differential between the United States and just about everybody else is rather strong, and it makes sense that the pair should continue to drift lower.

Keep in mind that the Australian dollar is highly levered to risk appetite, which of course has been eviscerated. The 0.71 level above seems to be offering resistance, so I think the market is one that you should fade every time it shows signs of exhaustion. The market breaking down below the 0.70 level would open up a significant selling opportunity, perhaps allowing the Australian dollar to go looking to the 0.68 level.

Any rally at this point in time should be a sign of offering “cheap US dollars”, as the US dollar continues to strengthen against almost everything. It is also worth noting that as long as the Federal Reserve has to fight inflation, there is a real possibility of demand destruction. Demand destruction means that commodities will eventually sell off quite drastically, allowing the possibility of this market to fall even further. Breaking below the 0.68 level would be horrific and allow the Aussie to go looking at the 0.65 handle. Breaking down below that could open up the floodgates.

At this point, the market breaking to the upside could challenge the 50-day EMA, where I would anticipate seeing quite a bit of resistance. On the other hand, if we can break above the 0.72 level, that could change some things in this market, at least for the short term. Nonetheless, this is a market that certainly does not look like it is ready to do that anytime soon, and I think we will continue to see more selling opportunities than buying opportunities. The overall attitude of the market is going with the rest of the currency markets, and that means that it is pro-dollar, and anti-just about anything else.

In general, this still looks to be a “fade the rally” type of market, but things could change depending on what Jerome Powell has to say during the press conference.

The Australian dollar had a wild session on Tuesday after the Reserve Bank of Australia raised interest rates by 50 basis points. That being said, the market shot straight up in the air to break above the 0.71 handle, but by the end of the day, we started to see selling pressure reenter the market. The fact that we gave back so much of the gains is a bad look, and it does suggest that the Aussie dollar is going to fall from here. The market has been very negative in this general vicinity, and I think it will continue to be difficult.

If we were to break above the 0.72 level, then the market might have the opportunity to go to reach the 200-day EMA. That being said, the market is going to continue to see the Federal Reserve as the key to where we go next, as the FOMC meeting is currently going on. By the end of the day Wednesday, we will not only have the interest rate statement coming out of the United States, but we also have a press conference to pay close attention to. If the Federal Reserve continues to look to be very hawkish, that will continue to push this market towards the US dollar.

If the market were to break below the 0.70 level, it would be a major breach of support. After all, we have been hanging around in a 500-point range between 0.70 on the bottom, and the 0.75 level above. If we do break above the 0.72 level, it would be very bullish because we will have broken above the top of several wicks to the upside, so that is something that we need to be cognizant of what goes on. At this point, it is going to come down to the Federal Reserve, so it is difficult to predict anything, but if you watch the price action during the trading session on Tuesday, it is clear that the market still favors the downside and by extension, the US dollar. In general, this still looks to be a “fade the rally” type of market, but things could change depending on what Jerome Powell has to say during the press conference. Most traders expect a 50 basis point hike, so anything more than that would also shock the market.

At this point, I do not see a potential long set up.

The Australian dollar initially rallied on Wednesday to reach near the 0.72 handle. By doing so, it shows a real chance of trying to recover. However, the market sold off almost immediately and has since looked very poor. By forming an inverted hammer, this suggests that the Aussie is still going to have a lot of overhead resistance. Because of this, I am not necessarily interested in trying to get overly aggressive to the upside, but I do recognize that rallies should continue to be faded.

Breaking below the bottom of the candlestick for the session on Wednesday opens up the possibility that we will go down to the 0.70 level, an area that has been important more than once, and an area that would attract a lot of attention due to the fact that it is a large, round, psychologically significant figure. Because of this, I would anticipate that a lot of support should show up there, but whether or not it holds would be a completely different question. After all, the US dollar has been like a wrecking ball against almost everything in the world.

The Australian dollar is also highly sensitive to commodity markets, so you will have to keep an eye on them as well. That being said, the commodity markets have looked a little bit soft in general, so it does make sense that we may see negativity here. Although Australia has been outperforming most other economies, the reality is that there is still a lot of concern when it comes to global growth, so it does make a lot of sense that we would see the Aussie dollar reflect the uncertainty of the underlying economy. Furthermore, Australia is highly sensitive to China which has a whole host of problems at the moment.

Keep in mind with the coronavirus lockdowns that we see going on in China right now have locked down over half the economy, so it is not very likely that Australia will be a beneficiary of Asian demand for its commodities. Beyond that, we also have the Federal Reserve tightening monetary policy, which continues to drive the US dollar higher in general, which obviously has a significant effect on this market. At this point, I do not see a potential long set up.