The Australian dollar went sideways and a very choppy session on Thursday, finding resistance just above the 0.76 handle. The market then broke down to the 0.7575 handle, and it looks as if it is likely to go down to the 0.7550 level after that. I think that’s an area that should continue to have quite a bit of support, so I think that a bounce from there should send this market higher. A breakdown below the 0.7550 level should then send the market down to the 0.75 handle after that. The Australian dollar is highly sensitive to the price of gold, and that should continue to be one of the main drivers of the market going forward. If we did somehow break above the 0.7650 level, the market then goes the much higher.
US dollar and Gold
Pay attention to what gold does after the jobs number, because that will offer a significant amount of momentum for this market, and this could be a situation where the US dollar sends gold higher or lower, and if that is the case, it’s likely that the Australian dollar will react accordingly. Because of this, this pair tends to move rather rapidly during nonfarm payroll Fridays, but it may not necessarily be the correlation that you would expect. Ultimately, I think that the buyers are coming back relatively soon, but if gold falls apart, this could be the beginning of another leg lower longer-term in this market as we continue to see volatility under the Forex markets. If we rally, I would ignore that rally unless it is of course a company the with gold rallying at the same time. Because of this, I think that the market will probably be somewhat dangerous today, and smaller positions might be recommended.
Written by FX Empire