Australian Dollar Continues to Recover

The Australian dollar has rallied a bit during the course of the trading session on Wednesday to reach towards the 0.7150 level, which is significantly noisy over the last several months. At this point time, the market looks as if it is struggling a little bit, but we will see whether or not we continue to go higher. I think at the very least, we need to break above the 50 day EMA to somewhat “confirm” the double bottom. Yes, the double bottom sits at the 0.70 level, which is an area that has been massively important on longer-term charts, and therefore I think it should be respected. That being said though, the RBA is rather dovish.

AUD/USD Video 03.02.22

The market breaking back down from here would of course suggest that we could make another run towards the 0.70 level, which would not surprise me if we were to get some type of “risk off behavior.” The market breaking down below that level would be an extremely negative sign. This would suggest that perhaps we have quite a bit of selling pressure ahead of us when it comes to risk appetite in general, so therefore I think it would be felt in other markets as well. The Australian dollar is considered to be a risk asset, as it is so highly levered to commodities and of course China. As long as that is going to be the case, it does make a certain amount of sense that we have to watch risk appetite falling, as people do not like to get too far away from some of the safer assets in those scenarios.

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