The Australian dollar initially tried to rally during the course of the trading session on Tuesday but then fell apart to reach down towards the 0.73 level again. That being said, the market is likely to continue to push to the downside due to the fact that the Australian economy is locked down, and of course we have seen quite a few signs that the Chinese economy itself is starting to slow down. If that is going to be the case, then it does make quite a bit of sense that we would see the Aussie selloff as a result. That being said, it is not necessarily going to go straight down, but it is obvious that there will be continued pressure.
AUD/USD Video 21.07.21
At this point, I like the idea of short-term pullbacks that show signs of weakness as an opportunity to get short yet again. With that being the case, I think that the overall US dollar strength continues to be a major driver of where we go next, and as a result I will be looking for an opportunity to drive this pair down to the 0.70 level.
That is the next large, round, psychologically significant figure, and it does make quite a bit of sense that we would try to get down to that area. To the upside, the 0.75 handle continues to be a major ceiling in the market, and it certainly looks as if we are going to continue to see a lot of negativity. All things being equal, we are also getting close to forming a major “death cross”, and that of course is a longer-term negative signal as well.
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