The Australian dollar has rallied during the trading session on Monday but does seem to be struggling a little bit extending this range as well. Ultimately, if the market were to turn around a break down below the 200 day EMA it should bring in plenty of selling. Ultimately, I do think that the Australian dollar is going to continue to react to all things China, and there are a lot of people out there that are trying to play the “reflation” trade, but at the end of the day the market has gotten far ahead of itself and it is very difficult to start buying the Aussie right here.
AUD/USD Video 02.06.20
US/China trade tensions of course will come into play as well, and I do think it is only a matter of time before the Aussie starts to feel that pressure. Admittedly, I am a bit surprised that it has been this resilient but at the end of the day it will be interesting to see when that day of reckoning comes, because it is very possible it could be quite brutal. Having said that, if we can get a daily close above the 0.67 level, one would think that we could make a run towards the 0.70 level, even though it would go against almost everything featuring long to take. At the end of the day “price is truth”, so as the markets have become so disconnected from reality, you can only trade the market that you are offered, not the one that makes sense. If the US/China trade tension situation ratchets up, it is highly likely that this pair will pay.
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