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Christopher Lewis

The Australian dollar rallied rather significantly during the trading session on Tuesday, slamming into the 0.7350 level. This is an area that has been major resistance previously, and therefore it should not be a huge surprise to see that we have pulled back. At this point, it is likely that we will continue to struggle to go higher, but keep in mind that this pair tends to move more or less on risk appetite. Risk appetite continues to rally, that could be the catalyst to finally send the Australian dollar higher.

AUD/USD Video 25.11.20

However, it should also be noted that we are a bit stretched and although we have been grinding higher, the reality is that there are still a lot of things out there that could cause issues for risk appetite and therefore demand for commodity currencies. This is not to say that I do not think we will break out eventually, it is just that I am not completely convinced that we are going to do so right now. After all, we have turned around right away from the attempted break out during the session.

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As things stand right now, I have to believe that short-term charts will continue to favor more of a back-and-forth type of action as we have seen over the last several sessions. If we break down below the 0.7250 level, the next major support level will be the 50 day EMA. On the other hand, if we break out above the 0.74 level, this is a market that is ready to go much higher as it would be a complete “risk on move” that could have legs.

For a look at all of today’s economic events, check out our economic calendar.

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