The Australian dollar has fallen a bit during the trading session on Wednesday, breaking below the 0.70 level. This of course is a negative sign but we also have other things to pay attention to underneath that could drive the market higher.
The Australian dollar broke down below the 0.70 level, reaching below there, not only break the large figure but slicing through the 50 day EMA. However, the 50 day EMA should offer plenty of support in theory, and therefore it’s likely that the market will continue to buyers underneath, and as a result it’s likely that we will continue to see choppiness. After all, this is a market that has been trying to form some type of bottoming pattern, and we did just crashed into a major downtrend line. I think the downtrend line being broken to the upside should send the market to the upside for the longer-term, and I do believe it’s only a matter of time before that actually happens.
Ultimately, it’s not until we make a “fresh low” that I would be concerned about the Aussie dollar, and with the Federal Reserve looking to cut interest rates I do think that eventually this pair does go higher. Yes, it’s highly sensitive to the Chinese situation but I think it’s only a matter of time before the Federal Reserve overwhelms the other central banks around the world as they typically do in these “races to the bottom.” Ultimately, I think that the market will find reasons to rally, and it should also be noted that the 200 day EMA is just above this downtrend line, and one stack it’s clear that there are a longer-term “buy-and-hold” traders that will be interested in buying after that happens.
Please let us know what you think in the comments below
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.