The Australian dollar broke down significantly during the week, slicing through an uptrend line that goes back to November 2015. That is a major turn of events, and I think at this point we are starting to see the possibility of a serious move. If we were to break down below the 0.75 handle, I would anticipate that the 0.7250 level would be support, and then possibly the 0.70 level. Ultimately, this is a market that I think continues to offer selling opportunities, unless of course we break above the 0.77 handle, which would show a complete reversal of this bearishness. I believe the next couple of weeks will be crucial for the future of this pair, but I would say that it looks likely that we may push to the downside in general. Having said all of that, if we were to break above the 0.77 handle, I believe that the market would go much higher, and it would be a very bullish sign for a longer-term move to at least the 0.80 level. That seems very unlikely though, and at this point I think that things are looking relatively bleak for the Aussie.
Pay attention to the 10-year treasury bonds, because they are a major driver of where the US dollar is going. If we continue to climb in yield, it’s likely that the US dollar will continue to strengthen against the Aussie. This also puts bearish pressure on the gold markets, which is a bit of a double whammy.