- The AUD/USD currency pair has rallied significantly during the trading session on Monday, as we continue to consolidate overall.
- The Australian dollar is a bit oversold, so at this point in time it’s likely that we will see the occasional bounce.
- At this point, I look at those as opportunities to start selling yet again, and that we could pick up a bit of “cheap US dollars.”
AUD/USD Consolidation Phase
The 0.64 level is an area of resistance, as it was previous support. The market was consolidating between that level in the 0.66 level, which is an area that has been very noisy. If we can break above there, then the 50-Day EMA comes into the picture, right along with the 0.67 level, which is what we would have to overcome in order to consider going long. At this point, the market would certainly continue to go much higher, but I don’t think it’s any time soon. After all, the 0.67 level is significant support, at least in the past. Multiple times in the past we have seen quite a few buyers in that area, so now I think it’s probably only a matter of time before we see massive sellers in that general vicinity.
Underneath, the 0.62 level is supported, but after that, it’s likely that the market could go down to the 0.60 level. At this point, I think we got a situation where you continue to fade rallies, but at this point in time it’s likely that we have sold off to the point where it’s going to take another shot to truly crush this market. It’s worth noting that the Australian dollar is also tied to commodities, so you will have to pay close attention to the idea of what commodities are doing.
Another thing to keep in the back your mind is that the Reserve Bank of Australia recently raised interest rates by 25 basis points instead of the expected 50, showing just how much there is no way of concern coming out of Oz. With this, I think you continue to see the US dollar override almost everything, including the Aussie dollar. Furthermore, you need to pay close attention to Asia, because there is most certainly a high correlation between Australia and large parts of Asia, especially China. Remember, most of Australia’s exports end up on the mainland.
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