The Australian dollar has been extraordinarily choppy during the trading session on Thursday, as we dance around the 0.76 handle. If we can break above there, I think we will test the 0.7650 level, but would expect sellers to come back sooner rather than later. Because of this, I don’t have any interest in trying to go long quite yet, and I believe that we will drop and find ourselves looking towards the 0.75 handle. That’s an area that will have a lot more significance from a psychological standpoint, but structurally it isn’t that impressive. Because of that, if we break down below the 0.75 level, the market could find itself going to the 0.7350 level rather quickly. On some type of breakout, we would need to see gold rally as well, as the gold markets are a major underlying driver of the Aussie.
In general, this is a market that I think continues to be choppy as most commodity markets will be, and of course the US dollar has been strengthening against the Aussie while it has been falling against the euro and the British pound in general. Because of this, it’s likely that we will continue to see this market drop because if it can’t gain when everybody else is against the US dollar, and when will it be able to? I think that rallies are going to attempt to build up enough momentum to send this market much lower, but we may have to take several attempts to do so. Overall, the choppiness continues, but I think the selling pressure will eventually take hold and push the market much lower. If we were to break out to the upside, the 0.7750 level would be massive resistance above as it has been in the past.
Written by FX Empire