The Australian dollar has fallen again during the trading session on Monday as we continue to see a bit of negativity in choppiness, and as a result it looks as if we are trying to figure out whether or not we will eventually break out. At this point, it certainly looks as if the momentum is still favors the downside, as we are trying to break through the 0.73 level. By breaking through the 0.73 level, it could open up a move down towards the 0.70 level over the longer term. Furthermore, the Australian dollar will suffer at the hands of the slowing Chinese economy, and the credit impulse in the mainland that is falling apart.
AUD/USD Video 17.08.21
The market will continue to go back and forth based upon the risk appetite of traders around the world, as the Australian dollar is much “riskier” than the United States dollar. To the upside, the 0.74 level above is likely to be major resistance as well, so I do not think that we break above there. As I watch this, it looks like we are trying to go lower, perhaps finally taking out at 0.73 level. Quite frankly, the market has been very quiet as of the last several weeks, not only here but everywhere else.
At this point in time, you could make an argument of a bearish flag, but regardless we have recently also had the “death cross” that quite often will proceed a big move to the downside as well. I would look to fade short-term rallies that show signs of exhaustion, but I would not look for fireworks anytime soon.
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