The Australian dollar has gone back and forth during the trading session on Tuesday, as we continue to see a lot of choppy behavior. Ultimately, this is a market that has seen a lot of resistance above at the 0.70 level that extends all the way to the 0.71 handle. If we were to break above there, then the market is likely to change its overall trend and be more of a “buy-and-hold” type of scenario. Having said that, the market is likely to continue to see a “sell the rally” type of scenario.
AUD/USD Video 01.07.20
The 0.68 level is support, and if we break down below there it is likely that we go down towards the 0.6675 handle. That is where the 200 day EMA currently resides, so of course that will be a bit of a magnet for price if we do break down. Breaking below that level opens up the possibility of a move down to the 0.65 handle. Quite frankly, the Australian dollar has formed a massive “V-shaped recovery” and that is a bit overoptimistic considering how the global economy is running.
Remember, Australia is a play on the global economy more than anything else, and therefore you should look at it as a commodity currency above and beyond anything else. If the Chinese are going to be building more “things”, and structures, then Australia does well due to the fact that the Chinese by so much of their raw materials from that country. That being said, I think it is only a matter of time before concerns around the world could weigh upon this currency. Even if you are extraordinarily bullish of the Australian dollar and the global economy, at the very least this pair probably needs to pullback or kill time before the major breakout.
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This article was originally posted on FX Empire