- You can see that the Australian dollar did initially try to rally during the trading session on Friday but gave back gains above that crucial 0.68 level.
- Now, the question here is whether or not the market will continue to see a lot of downward pressure, or if this is just simply a little bit of profit taking.
The core PCE numbers came out and they were pretty much as expected. So, with that being the case, it's not a huge surprise to see that we haven't really seen a massive move, although this is a very negative candlestick. I don't think it is anything else other than the market trying to get involved and close out its position before we head into the three-day weekend.
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Even if we do bounce from here, I think there is a lot to worry about above. I do think that given enough time, if we were to break down, this is a market that could go look into the 50 day EMA. But I'm not necessarily saying that's likely yet because we have seen so much upward pressure. The Federal Reserve is likely to cut at the end of the month. Now we are even looking at a series of cuts. So, I think that will continue to put downward pressure on the greenback, but in the longer term, the greenback is a little oversold. So, we may have some sideways action in the short term.
With this being said, it's likely that we will see a lot of chop. Also, you have to keep in mind that anytime you are trading the Australian dollar, you are also trading at risk appetite. Remember the Aussie dollar itself is a commodity currency. It is also something that a lot of people will jump into in order to express global growth and to play the Asian markets. So really at this point in time, I think it's still somewhat positive, but we just got a little ahead of ourselves.
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