Australian Dollar Rockets Towards 200 Day EMA

The Australian dollar has rallied rather significantly during the trading session on Wednesday, perhaps in sympathy to the interest rate hike in New Zealand, as the two currencies tend to move in concert. Ultimately, I think that the 200 day EMA could come into the picture to offer resistance, but the market is likely to see a bit of hesitation not only based upon that indicator, but the fact that the 0.73 level has been resistance previously to begin with.

AUD/USD Video 24.02.22

Ultimately, the Australian dollar is a “risk on currency”, but you should also pay close attention to the idea that these currencies, the Australian and New Zealand dollar, may both need to be repriced because of inflationary headwinds. Because of this, the central banks in those countries may both need to continue raising rates. We will have to wait and see, but it is worth noting that the Reserve Bank of Australia was not exactly as hawkish as the RBNZ was. In other words, the best trade may actually be to short AUD/NZD more than anything else.

Keep in mind that if there is any type of “fear trade” out there, it is very likely that the US dollar would get a bit of a bid, and we would break down. However, we get a significant close above the 0.73 level on the daily chart, it is very possible that the Aussie may go looking towards the 0.75 level above, an area that of course has offered both support and resistance previously, and it is of course a large, round, psychologically significant figure that would create a lot of headlines anyway.

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