The Australian dollar had a very volatile session on Thursday, initially breaking above the 0.75 handle, then dropping much lower. The last couple of days have been interesting, as it looks like we are running out of upward momentum. Because of this, I think that there is a real danger of a fall from here, and if gold markets can hold support at the $1250 level, that could accelerate the downward move. We currently have an uptrend line that the market has been following, which is just below current pricing. The market breaking below that uptrend line is yet another reason to think that we may continue to drop. If we do, I would expect that the 0.74 level underneath will make a nice target for most traders.
Commodities and the effect on the Aussie
There are a couple of different commodity markets you should be paying attention to when it comes to the Australian dollar, including gold and copper. Both have been extraordinarily volatile as of late, which is what we’ve seen in the Aussie dollar as well. Because of this, I think it will continue to be difficult to hang onto a position, so we need to either see a break above the recent highs, or a breakdown of significance to put any real money to work. Ultimately, the choppiness should continue as traders seem to be all over the place when it comes to interest rate expectations out of the United States and of course Asian demand for base metals coming from Australia. A breakdown below the 0.7440 level would be a confirmation of a roll over, and that could signal much lower pricing, but in the meantime the noise continues, making this market and incredibly difficult one to be involved in.
Written by FX Empire