The Australian dollar has initially tried to rally during the week but gave back the gains to plunge towards the 0.7150 region. This is an area that I think will continue to be of some interest, as the markets have shown a proclivity to the downside as the situation in China continues to deteriorate. Furthermore, Australia has a central bank that is very dovish, while the Federal Reserve in America is looking to taper bond purchases. If that is going to continue to be the case, then it makes quite a bit of sense that we would see this pair favor the greenback.
AUD/USD Video 29.11.21
There was news on Thursday of a new variant of the coronavirus, which of course is a “risk off event” that has had a huge negative effect on the markets in general. As long as that is going to be the case, people are going to be much more comfortable holding on to the greenback as opposed to the commodity currencies. At this point, I still believe that this pair probably goes looking towards the 0.70 level, but it may take a while to get there.
Rallies at this point still look like selling opportunities to me and will be treated as such. Any signs of exhaustion between here and the 0.75 level is more than likely going to get me short of this market from a longer-term standpoint. If we break down below the 0.70 level, then it is likely that the Aussie dollar goes looking towards the 0.68 level over the longer term. Keep in mind that risk appetite has a lot to do with where this pair goes as well.
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