Australian Dollar Reaches 50 Day EMA

The Australian dollar has tried to reach towards the 200 Day EMA during the trading session on Monday but has failed and then broke down towards the 50 Day EMA underneath. At this point, the market is squeezing between the two moving averages, which typically means you are trying to build up enough momentum to get moving for a bigger gain or loss. At this point, I think the Australian dollar is probably going to be waiting around to see what the Federal Reserve does this week.

AUD/USD Video 15.03.22

The Aussie dollar of course is highly correlated to the commodities market, so that has helped the Aussie as of late. This is despite the fact that there are a lot of people out there looking for safety, and that typically means buying the US dollar. However, over the last couple of days, we have seen a little bit of a shift to the downside so be interesting to see how this plays out. I suspect that once we get through the Federal Reserve statement later this week, we may have a bit more in the way of clarity.

Keep in mind that the Federal Reserve is going to raise interest rates this week, but the question is going to be what the statement is as far as attitude is concerned. If they sound like they are going to remain hawkish and fight inflation, that is probably going to work against this pair, driving the Australian dollar towards the lows. On the other hand, if the Federal Reserve does step back a bit, then it is possible that we may see a retest of the recent highs.

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