The Australian dollar rallied slightly, but at the end of the day it’s a very overextended rally that we have seen. Overall, I think that the market rallying the way it has is a bit overdone, and of course I think that the US/China trade talks will of course have a major influence on this pair. The Australian dollar is highly sensitive to the Chinese economy, so it’s not a huge surprise to see that we would struggle. I think at this point, the 0.70 level underneath will continue to be important, but it would not surprise me at all to revisit that level in the short term.
AUD/USD Video 08.01.19
On the upside, we have the 200 day EMA which is just above the 0.7250 level, an area that of course will attract a lot of attention from a psychological standpoint. I think that an exhaustive candle in that area should be a nice selling opportunity as well. I don’t believe that the Australian dollar can sustain a longer-term rally based upon the uncertainty around the global markets, but if we do break above the 200 day EMA, then we could make a run towards the 0.75 level. If we get some type of trade deal between the Americans and the Chinese, then we could perhaps see a move even higher but I think that is what is going to be necessary for the Aussie to finally jump back into favor for the longer-term.