The Australian dollar has been hammered during the trading session on Friday, but at this point it’s likely that the market will have to bounce a bit due to the fact that it is oversold. Granted, the Australian dollar is highly sensitive to the Chinese economy and what’s going on there, which of course is getting crushed by the coronavirus situation. A lack of demand for copper and other raw materials out of Australia will probably continue to suffer, so at this point I think it’s likely that the market will sell the Australian dollar is a bit of a proxy. Furthermore, the US dollar is picking up quite a bit of momentum due to the fact that the markets are completely freaking out around the world, as the coronavirus has seemingly accelerated.
AUD/USD Video 02.03.20
The market participants will more than likely sell into any rally that we get at this point, so looking for signs of exhaustion will be the way to go. I believe at this point, it’s a matter of time before you get some type of opportunity to sell this pair. Quite frankly, if we do break down below the lows of the Friday session, it is of course a selling signal, but I much prefer selling rallies Sibley because we are a bit overextended. I still believe that this pair is probably going to go looking towards the 0.63 handle, which was the bottom of the financial crisis back over a decade ago. To the upside, I believe that the 0.66 level could offer more selling, and most certainly the 0.67 level will. All things being equal it’s likely that the market could see a bit of a bounce late in the Friday session just due to short covering.