The Australian dollar has rallied a bit during the trading session on Monday, breaking above the 50 day EMA and continuing to go higher. Ultimately, this is a market that is going to continue struggling overall, simply because there is a lot of risk aversion out there. Yes, the Australian dollar has the benefit of being tied to the Chinese economy, but at the end of the day the US dollar is still considered to be a “safety currency.” It is because of this that only believe this market will probably be somewhat flat, which is essentially how many other markets are acting. We have recently seen US dollar strength, and that may have caught some people off guard.
AUD/USD Video 06.10.20
To the downside I see plenty of support down at the 0.70 level, so if we were to break down below there it could open up a bit of a trapdoor to lower pricing. Alternately, if we can break above the uptrend line that I have marked on the chart, then we have an opportunity to go looking towards the 0.73 handle, possibly even the 0.74 level. It is a bit difficult to hang onto trades at this point, because there are a lot of moving pieces when it comes to the global economy.
Furthermore, the US dollar may get bought as there is so much confusion. Ultimately, I think we are looking at a very volatile market over the next several sessions, as we are looking for some type of catalyst or reason for the market to make some type of move. I think at this point we are relegated to short-term range bound trading.
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