The AUD/USD has slammed into the top of the overall consolidation area again, as we continue to see a lot of back and forth in the Forex world. This is a difficult market to trade for anything other than short-term trading, because there are so many questions as to what’s going to happen with the global economy, and of course the Asian economies as well. After all, Australia’s highly sensitive to Asia, and the situation in China continues to be a bit muddy.
Commodities are also a big part of what you see pushing the Australian dollar around, so I think given enough time we probably see this as a scenario where we fade rallies, but the question is exactly when we can. The 0.64 level has been important multiple times, so it does make a certain amount of sense that we would see a bit of hesitation here. If we see any signs of exhaustion, there will probably be some selling, especially if there is more of a “risk off move” around the world.
The alternative is that we rally above the 0.64 level and dig into the previous consolidation area. The market breaking above 0.64 will then have to struggle with the area all the way up to the 0.65 level. The 0.65 level will also have to consider that the 50-Day EMA is sitting right there as well. Because of this, the market is likely to continue seeing resistance in that general vicinity. Even though we’ve had a little bit of a squeeze to the upside, nothing is changed, and the US dollar is still the currency to own in a very risky environment.
We do have interest rates hikes coming in November from the Federal Reserve, but a lot of people going to be paying close attention to the statement from the Federal Reserve, because everybody is trying to “guess” where the central bank is going next.
- Inflation is still extraordinarily high in the United States, so it’s difficult to imagine that they are going to do anything but be very hawkish.
- However, if there is some type of surprise out of that statement, then it’s likely that we would see a rip roaring rally, but that is very unlikely at this point in time.
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