The Australian Dollar Gives Up Gains for the Week

The Australian dollar initially rallied during the course of the trading week but gave back gains as the US dollar continues to strengthen due to higher interest rates. The jobs number came out much hotter than anticipated, thereby putting a lot of upward pressure on yields in America. This makes the US dollar a lot more attractive, and therefore it is not a huge surprise to see that the market has fallen back down. What is worth noting, is that we are testing a major round figure, and the form of the 0.70 level.

AUD/USD Video 07.02.22

The 0.70 level is a large, round, psychologically significant figure, and therefore a lot of people will be paying close attention to it. If we break down below there, it would be a major breach of support and could open up a move down to the 0.68 handle. 0.68 level is also important based upon historical precedents, so a break down below that could send the Aussie dollar reeling.

The candlestick is a bit of an inverted hammer, so if we were to break above the top of it, this would be a very bullish sign to say the least. That being said, we would need to see some type of bullish behavior on risk appetite and a selling of the US dollar in general to make that happen. I do not see that happening, but I do not necessarily see a massive meltdown either. It will be interesting to see how this plays out, but the attitude certainly seems to favor more or less a negative attitude when it comes to this market.

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