The Australian dollar initially tried to rally during the trading session on Wednesday but struggled at the 0.67 handle. This level seems to be more or less a magnet for price, and it looks as if we are going to continue going lower eventually. However, there is the area just below that extends down to the 0.63 handle, which was the consolidation area during the financial crisis, so that shows just how low we are. Coronavirus continues to be a major issue for the Chinese, thereby taking Australia’s biggest customer out of the equation.
AUD/USD Video 20.02.20
All that being said, the market shows a significant amount of resistance at the 0.6775 handle, so if we were to turn around a break above there it would be very bullish sign. At that point, I would anticipate that the market may go looking towards the 0.70 level above. All things being equal, it’s very likely that the market is sold into on short-term rallies that show signs of exhaustion. The US dollar of course is favored over the Aussie dollar in this current environment, so a continuation to the downtrend makes quite a bit of sense. Until the situation in China stabilizes, it’s very unlikely that the Australian dollar can rally for a significant amount of time so therefore it should continue to be weak. Having said that, I do believe that paying attention to the longer-term chart makes quite a bit of sense because we could be trying to form a basing pattern in this area.