The Australian dollar initially tried to rally a bit during the trading session on Wednesday but then pulled back to reach down towards the 0.77 handle. At this point, the market is likely to continue to see the 0.78 level as massive resistance, and it is not until we break above there that the Aussie can continue its overall bullish stance. In the short term, I believe that we are essentially looking at a market that is trying to figure out where to go next, as it is a consolidation area that we are and right now that is just waiting to happen.
Looking at this chart, the 50 day EMA underneath should offer a significant amount of support, with the 0.76 area sitting just underneath it, and has proven itself to be supportive as well. In general, I think the market is simply going sideways in trying to figure out what to do, and a simple move to the upside would make quite a bit of sense but we need stimulus to get passed in the United States, because quite frankly the markets have been waiting for this forever.
The question is whether or not it is going to be big enough to excite the market, because the Australian dollar is so highly tied to the commodity markets, which of course will be highly sought after if we do in fact get some type of major rebuild. On the other hand, if there is some type of problem with stimulus, that will probably send this market straight down, especially if interest rates continue to rise in America which is also causing some issues.