The AUD/USD pair initially tried to rally during the course of the session on Thursday, but as you can see turned back around somewhere near the 0.71 handle. By doing so, we ended up forming a bit of a shooting star, which of course is a negative sign. That shooting star sits right on top of the 0.70 level, an area that has been massively supportive lately. With that being the case, if we can break down to a fresh, new low, I would be a seller as the Australian dollar should continue to break down. At that point in time I would anticipate this market going down to the 0.68 level, an area that has shown promise for support on the longer-term charts.
Underlying weakness
I believe that there is underlying weakness in the Australian dollar for several reasons. The first one of course is the gold markets which have been soft for some time. Australia is highly influenced by the price of gold as far as currency is concerned, and as a result I expect that to continue to be a drag on the value of the Aussie. Beyond that, we have softness in Asia, and it appears that the export demand for Australian commodities will be slowing due to what’s going on in places like China. That of course rings down the demand for the Aussie dollar, and therefore continues to put pressure here in this marketplace.
Rallies at this point in time should be selling opportunities, as the downward pressure is so strong. I believe that the 0.72 level is a massive “ceiling” in this market, and it’s only a matter of time before sellers reenter if we do rally from here. I think that the Australian dollar will continue to suffer in general, and as a result I have no interest in trying to buy this currency at the moment.
