The Australian dollar has initially fallen a bit to kick off the trading session on Monday but found support at the 0.7350 level. Part of this was probably a bit of a “knock on effect” from all of the concerns when it comes to Brexit, and the never ending drama that the situation seems to provide. Having said that, eventually people realize that Australia has more to do with Asia than the United Kingdom, and they start buying the currency again.
AUD/USD Video 08.12.20
Keep in mind that a lot of traders around the world are focusing on the “reflation trade” more than anything else, and that should continue to help the Aussie as it is so highly correlated to commodities. The 50 day EMA is now breaking above the 0.7250 level, so it makes that area of 100 pips even more important. Because of this, I do like the idea of buying dips and it is clear that the rest of the world is trying to sell greenbacks as quickly as possible.
Because of this, I think what we will probably see here is more of a “buy on the dips” type of scenario again, as the trading community continues to focus on the Federal Reserve and stimulus coming out the United States. Because of this, I think it is only a matter of time before buyers continue to sell the greenback, but we may have a couple of more attempts before we can finally break out to the upside. The 0.75 level is a major psychological barrier that looms large.
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.