- The Aussie dollar continues to trade in a tight range, as it looks like a lot of the major currency pairs are simply “stuck“ at the moment.
- If this continues, the breakout could be rather drastic when it does happen.
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Choppy Behavior
The Aussie dollar has been very choppy and quiet early during the trading session. On Thursdays, we continue to see a lot of noisy behavior. Ultimately, we are at the top of a consolidation area. And right now, it looks like we just don't have any real strength one way or the other. And I suspect that this will be a relatively flat pair in the short term. That being said, I do have a couple of areas that I'm paying close attention to for a potential trade signal. If we were to break above the shooting star from last week's Friday session, then I think you have an opportunity for the Australian dollar to really flex its muscles and perhaps head to the 0.6750 level followed by the 0.69 level.
If we were to break down below the candlestick from Tuesday, ostensibly breaking below the 50 day EMA, then it's possible that the Australian dollar drops down to the 0.65 level. As things stand right now though, I look at this more or less as a range bound, neutral, flat market. That's going to be true with a lot of the major pairs right now, there just doesn't seem to be any drive to go anywhere. Central banks around the world all look like they're going to cut rates, so at this point, there are no real winners or losers.
Yes, if we get more of a risk on move, that will help the Australian dollar, but the exact opposite could be true. If people become concerned, that helps the US dollar. There's also talk about, perhaps the Federal Reserve may pause its idea of rate cutting, and therefore, if that ends up being the case, that could shock the market as well. Either way, this is a market that I think you need to see some type of breakout of this range we have been in in the last five or six trading days to really put any money to work.
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