The Australian dollar has rallied a bit during the course of the trading session on Friday as we continue to see the Aussie grind back and forth in the same consolidation area we have been in for a while. With this, the market does not look like it is ready to go anywhere but I would also point out that there is a massive amount of resistance above at the 0.74 level that continues to cause issues. Furthermore, I think part of this may have been short covering as we simply grind back and forth. I would also point out that there is the so-called “death cross” sitting just above the 0.75 level from a couple of weeks ago, and therefore I think that the market will continue to respect the downside. Furthermore, you could even make a bit of an argument for a bearish flag.
AUD/USD Video 16.08.21
Australia continues to lock itself down, and that of course is not going to do any favors for its own economy, so with that being the case I think the Aussie will continue to be punished. With the M2 drop in acceleration, which is not a good sign either, as it suggests that we are going to run into a bit of a liquidity issue. That always sends the US dollar higher, because there is a huge demand for those dollars. The Chinese economic numbers have not been very good as of late, and that of course will overshadow what is going on in Australia as well. With this, the market is likely to see a continuation to the downside given enough time. However, we are in the midst of the slowest time of year so that is part of what has been going on.
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