The AUD/USD pair initially tried to rally during the Tuesday session but turned around at the 0.7550 level. We fell from there and then broke down somewhat significantly. The Australian dollar continues to be very volatile, but the breaking below of the 0.7520 level looks very negative. If we can break down below the 0.75 handle, the market should then go to the 0.7450 level. Obviously, the gold markets have a significant amount of influence on the Australian dollar, so I will be paying attention to those. They have broken to the downside over the last several sessions, and that of course continues the way upon the Aussie in general.
If we broke above the 0.7550 level, the market should then go to the 0.76 handle above. Currently, looks as if the commodity currencies are all in trouble, and it’s not just the Australian dollar. The New Zealand dollar and the Canadian dollar both are being beaten up on, so I believe that we will continue to see this market drop from here. The market breaking down from here could see as low as the 0.70 level, but that is a much longer term call. If we do breakout to the upside, and clear the 0.7550 level, the 0.76 level will be a major area of contention. Once we were to break above there, the market would more than likely go looking for the 0.7750 level. Volatility is to be expected, but like I said I am much more comfortable trading with the same direction that the gold market is moving in. Those moves tend to last longer, and that should be what you aim for if your trading the AUD/USD pair. The market continues to show choppiness, and I think that will be the case for the next several sessions.
Written by FX Empire