The Australian dollar continues to fall, as Tuesday was yet another negative session. It looks as if we are heading towards the 0.76 level underneath, which should offer some psychological support. However, if we break down below there, I think the market is more than likely going to go looking towards the 0.75 level underneath. That level should offer significant support, as it is a large, round, psychologically important number. Overall, I think that breaking down below there sends this market down to the 0.73 level next, and you should pay attention to gold as it will certainly have its influence on the Australian dollar as per usual, but also the US dollar has been strengthening in general, and that of course is part of the equation as well.
If we do rally from here, I would be surprised to see this market break above the 0.77 handle. I also recognize that above the 0.7750 level is the beginning of massive resistance as well, and should send in plenty of selling pressure. We have been drifting in a very sloppy and negative pattern for several days now, but given enough time I think we will see a pickup in momentum. I suspect that the central bank announcements coming out in New Zealand could have a bit of a knock-on effect over here, as the 2 currencies tend to move very similarly. In general, I think volatility is going to continue to be an issue, and therefore short-term trading with a slightly negative bias is probably the best way to go looking at the daily chart. If you do not have the patience to wait for rallies to fail, you will probably struggle in this market as it seems to be attracting attention in both directions, with of course the sellers having a bit more strength.
Written by FX Empire