Aussie Dollar Continues to Attempt Recovery

The Australian dollar has rallied again during the Tuesday session, after initially dipping lower. By doing so, the market has now set its sights on the 0.71 handle, as we have obviously shown a proclivity to protect the 0.70 level underneath. With that being the case, it is possible that we may be trying to reach some type of bottom, but at this point in time I also recognize the fact that we have seen so much negativity that a bounce certainly had to happen. This is a bit like the stock markets, there comes a point in time where there is nobody left to short the market.

AUD/USD Video 02.02.22

As things stand right now, it looks as if the 0.70 level is trying to form some type of “double bottom”, and that of course could be bullish longer term. The longer-term charts certainly do suggest that this is an area of interest, but the RBA is one of the least hawkish central banks in the major markets, so how long this can last is a completely different question. Furthermore, if things do start to deteriorate the Australian dollar will almost certainly get sold off.

I anticipate that we are probably going to bounce quite a bit in a range between 0.70 and 0.72 over the next couple of weeks, and I think that the selloff and subsequent bounce may have simply been an attempt to carve out that range. That is the case, we are essentially in the middle and therefore not in a good spot to pick a direction at the moment.

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