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Christopher Lewis

After a couple of days of strength, it looks as if the Australian dollar is starting to run into a little bit of trouble at the 50 day EMA. This is an indicator that a lot of longer-term traders pay attention to, so it should not be a huge surprise that we may have some problems here. Furthermore, we had recently sold off rather drastically so it does make sense that we could perhaps see a bit of a struggle in this general vicinity.

Nonetheless, I do not like the idea of shorting this pair quite yet. I see a significant support barrier that extends down to the 0.70 level, an area that is not only a large, round, psychologically significant figure, but an area that has seen quite a bit of interest in the past. With that in mind, I like the idea of waiting to see whether or not we can break down through that region. This is because if we do, it will be a major breakdown through a major handle. In the short term, it is very likely that we see choppy behavior as this has been an area of interest more than once.

AUD/USD Video 01.10.20

Do not forget that the end of the week sees the job figures coming out the United States, and that of course can have its own effect on the markets. It certainly will dictate the risk appetite going forward, so I would be a bit cautious about getting too heavily invested in any particular trade between now and then. The Aussie of course has been much more resilient against the US dollar than other currencies, so it is going to remain a bit stubborn as far as selling is concerned.

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

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