Australian Dollar Recovers to Kickoff Week

The Australian dollar has rallied a bit during the trading session on Monday, to show signs of life yet again, as the Australian dollar continues to test the 0.71 handle. All things been equal, this is a market that is highly influenced by risk appetite, and whether or not we can break above that high made last week will come down to how traders are feeling about the overall markets. Keep in mind that the US dollar is considered to be a safety currency, while the Australian dollar is all about commodities and expansion into Asia.

AUD/USD Video 08.02.22

The Reserve Bank of Australia has suggested that they are still very dovish, so it does make a certain amount of sense that we will see the Australian dollar struggle. In fact, the 50 day EMA above is sloping lower and looks very likely to offer resistance. If we break down below the bottom of the candlestick for the trading session on Monday, then it is very likely that we go looking towards the 0.70 level underneath, which is a large, round, psychologically significant figure, and of course an area that has been important for quite some time.

That being said, the market is very likely to see a lot of noisy behavior, as we worry about inflation, and whether or not the economy is going to suffer at the hands of the supply chain crisis. All things being equal, we are making “lower highs” as we go along, so I am more inclined to short signs of exhaustion overall.

For a look at all of today’s economic events, check out our economic calendar.