The Australian dollar has fallen a bit during the day on Thursday but seems to be finding a lot of support at the 0.78 handle. This is the 50% Fibonacci retracement from the massive move higher, and of course a large, round, psychologically significant number that has attracted attention in the past anyway. Because of this, I think that it’s only a matter of time before the buyers get involved in push this market back towards the 0.79 level. I anticipate that most traders will be looking at the gold market for signals as well, which has been unnecessarily beaten up over the last couple of days.
If we are beyond the “risk off” fear of the markets, then I think that the Australian dollar is a prime candidate for movement. After all, it is highly leveraged to gold, which has been acting more like a currency and less like a haven asset as of late. They both should move together, and they both look as if they are trying to find some type of footing. The 0.80 level above will of course be resistance and noisy yet again, as it is a long-term pivot point for the currency pair going back decades.
The alternate scenario is that we make a fresh, new low, and that should send this market looking for even more support at the 0.7750 level, which has seen a lot of action in the past.
Written by FX Empire