The Australian dollar has been somewhat volatile during the trading session on Monday, remaining in a reasonably tight range. That’s not a huge surprise though, because we get the Monetary Policy Meeting Minutes coming out first thing this morning, so at this point it’s likely that the Australian dollar will see a bit of volatility over the next 24 hours. Now that we have that coming out, I suspect that the next move will be dictated by that. A breakdown below the 0.75 level underneath should send this market down to lower levels, perhaps the 0.7350 level after that. That’s an area that should be important, and of course we will have to pay attention to the gold markets as they have a massive effect on this market. Right now, they don’t look as if they are ready to take off anytime soon, so I believe that we will continue to see downward pressure, unless of course the central bank surprises.
The 0.76 level above is resistance, and it’s not until we were to break above there that I think the market can pick up some momentum. If we were to break down from here, I suspect that the move would be somewhat rapid, and possibly vicious. The Australian dollar has a lot of headwinds facing it, not the least of which is a bit of a “risk off” attitude around the world. Stock markets have gotten a bit elevated, and volumes are dropping, then typically means that we could see a bit of a selloff when it comes to riskier assets, and the Australian dollar of course falls into that category. If we have trouble with Asian markets as well, that could also influence the Aussie dollar. I favor the downside, but am more apt to sell rallies than anything else.
Written by FX Empire