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Christopher Lewis

The Australian dollar has gone back and forth during the trading session on Monday as the market had formed a hammer during the previous session. Ultimately, the Australian dollar has been in an uptrend, but we have seen a little bit of a pullback in the short term. This makes quite a bit of sense though because the market has been grinding higher and then jumped out of what could be thought of as a short-term ascending channel.

AUD/USD Video 08.09.20

The 50 day EMA currently sits at the 0.71 handle, which is the beginning of massive support down to the 0.70 level. Given enough time, the market is likely to continue to find buyers on dips and reach towards the 0.75 level, at least that is my longer-term target. This does not mean that we get there overnight, but you should keep in mind that the trend has been higher for quite some time, but ultimately this is a little overdone. Buying dips has worked for some time, and with the Federal Reserve continuing to expand monetary policy, it is a bit difficult to see how this trend changes.

That being said, the Chinese economy continues to pick up a bit, which of course has an influence on the Australian dollar as well, as the Aussie economy is one of the main providers of raw materials for construction and exports, so therefore it is highly correlated to the Chinese economy in general. As things continue to loosen up globally, this pair should continue to go higher, much to the relief of the Federal Reserve.

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

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