The AUD/USD pair initially went sideways during the day on Tuesday, then collapsed to reach towards the 0.76 level underneath. The market looks very negative, as the selloff has been rather brutal. Because of this, the market should make a significant move and one direction or the other after we decide where to go next. If we get a breakdown below the 0.76 handle, the market will likely reach towards the 0.75 handle underneath which of course is the large, round, psychologically significant underneath. I believe that this pair of course is continuing to struggle as gold markets continue to be pounded, and of course has a knock-on effect over here. As gold falls, the Australian dollar unravels. The gold markets breaking down below the $1220 level should send this market down to the $1200 level after that. A breakdown below there should continue to send the Australian dollar even lower, as it would be very negative.
I believe that after this massive breakdown, it’s likely that we will start selling on signs of exhaustion. The 0.7675 level above is massive resistance, so if we were to break above that the market could continue to go much higher. In the short term, I think that the gold markets falling apart is likely to continue to put massive pressure on this currency. I believe that the US dollar will strengthen due to interest rate differentials shrinking, and of course the Federal Reserve looking likely to tighten interest rates and connotative easing over the longer term. Because of this, I believe that the Australian dollar is going to continue to struggle in general, but the only thing I think you can truly count on in this pair is going to be the volatility remaining.
Written by FX Empire