Australian Dollar Trying to Form Bottom for the Week

The Australian dollar has rallied significantly during the course of the week but as you can see, we have given up about half of the gains. This suggests that although the market is bullish for the week, we still have a lot of work to do. After all, James Bullard put a turbocharging to the US dollar as he suggested that a 50 basis point hike was necessary, and then of course the Federal Reserve has scheduled an emergency meeting on Monday, suggesting that perhaps they probably will tighten sooner rather than later.

AUD/USD Video 14.02.22

The 0.70 level has been important multiple times over the long term, and it does make a certain amount of sense that we bounce from there. Whether or not that ends up being a true “double bottom” is a completely different question but at this point I think you have to take a serious look at that level as an indicator for the longer term. If we were to break down below that level significantly, then it is likely that we would see a massive selloff of the Aussie dollar. On the other hand, if we can break above the highs over a month ago, then we could go looking towards the 0.75 level. I think we have a lot of work to do to figure out where we are going, but in the short term one has to think that we are probably going to go more back-and-forth than anything else as we are trying to figure out just how broken the markets are right now.

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