Australian Dollar Plunges

The Australian dollar has been the victim of rising interest rates in America during the day, just as many other currencies have. That being said, I think it is obvious that we are going to continue to see a lot of noisy behavior in this general vicinity, and therefore we need to be cautious of the 0.70 support level. That is obviously a large, round, psychologically significant figure that a lot of people will be paying close attention to, as it has also been important multiple times. In fact, we recently formed something that looks a bit like a “double bottom” in that general vicinity.

AUD/USD Video 07.02.22

Looking at the chart, if we were to break down below the 0.70 level significantly, that could send this market racing to the downside. Whether or not that happens remains to be seen but I certainly would not be a buyer of the Aussie at this point. Quite frankly, the Aussie needs to prove itself in ways that I just do not see it doing right now. Because of this, I am looking for short-term rallies to sell, but I also recognize that this is probably going to remain a somewhat short-term type of market.

On the other hand, if we were to take out the highs of the trading session on Thursday, I might be convinced to start buying because it would be such a remarkable turnaround. Whether or not we get that is a completely different question of course, but I think at this point in time you need to at least give the idea of the alternate scenario a thought.

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