Australian Dollar Continues to Struggle

The Australian dollar has shown itself to be very volatile, as we initially tried to rally during the trading session on Tuesday, only to give that back as inflation numbers in Austria came in much hotter than anticipated. However, this is probably going to be more about the Federal Reserve, as it is essentially the biggest concern of the market right now. After all, the Fed has recently been much more hawkish than in the past, and therefore a lot of “risk off behavior” had entered the market. With that being the case, I think that you have a situation where the Aussie probably continues lower unless of course the Fed surprises with a dovish tone.

AUD/USD Video 26.01.22

At this point in time, the 0.70 level is more than likely going to be the longer-term target, as it is a large, round, psychologically significant figure and of course an area where we have bounced from recently. Furthermore, when you look at longer-term chart you can see that it has been important more than once. Because of this, the market is very likely to continue seeing that as an important area. If we give up the 0.70 level and break down, that would almost certainly be a very negative turn of events.

To the upside, if we can break above the 0.72 level we could make a run towards the recent highs, but it will more than likely be somewhat difficult to make that happen. Quite frankly, this is probably all about Jerome Powell and not much else. I would be a bit cautious trading anything over the next 24 hours, but if I had to put a trade on here it would be to the downside.

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