Australian Dollar Hesitant

The Australian dollar has gone back and forth over the last couple of days, as risk appetite seems to be all over the place. Because of this, it should not be a huge surprise to see that the range has tightened up over the last 48 hours, and now that we are heading into the jobs number on Friday, it is very possible that we remain stagnant between now and then.

AUD/USD Video 04.02.22

One thing that I would point out is that it appears we are trying to make a “lower high”, which of course is a bearish signal indeed. Ultimately, the Australian dollar is considered to be a risk asset, so you need to keep that in the back of your mind if you are in fact going to trade it. Risk appetite is all over the place at the moment, and therefore it makes the Aussie very volatile. The market is clearly struggling to come up with a sustainable narrative, and as long as that is going to be the case, we will continue to see currency such as this one struggle. I think that ultimately, we will get some type of clarity, but it is not going to be easily had, I think.

Every time the markets get a little bit spooked, you can almost certainly count on the idea of the US dollar picking up strength. That being said, we have bounced from the 0.70 level which of course is a major round figure and an area that a lot of people will be paying close attention to. If we were to break down below that level sustainably, that could spell a lot of trouble for the Aussie dollar. The fact that we bounce from there is not a huge surprise, but the real question is whether or not we can break above the 50 day EMA to show strength?

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