- The Australian dollar has tested the 0.6450 level early on Thursday, but it looks as if it's going to struggle to continue going higher.
- At this point in time, the 0.6450 level is one of the most important levels due to the fact that it previously had been support but going back into late last year it was resistance as well, so I think a lot of market memory comes to fruition here.
Keep in mind that the US dollar is considered to be a safety currency and of course the Federal Reserve is likely to keep interest rates fairly tight for at least the next several months if not the rest of the year and a lot of people are paying close attention to that. That obviously makes the US dollar strong and of course that has shown up here.
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Furthermore, you have to keep in mind that the Australian dollar is considered to be a currency that people trade when they are willing to take a certain amount of risk, as it is highly levered to the commodities markets, and of course, Asia, specifically China. So, at this point, I expect a lot of noisy behavior, but if we can break above the inverted hammer from the Monday session, then I think the Australian dollar will more likely than not recover, perhaps even going as high as 0.6650.
On the other hand, if we do fall from here, the 0.64 level is an initial support level. Giving that up would open up the potential for a revisit of the bottom near the 0.63 level. Either way, I think you're going to see a lot of choppiness and you have to pay close attention to the bond yields in America because they will dictate where we go.
Ultimately, the AUD/USD market will continue to be very noisy, so you need to be cautious with your position size. Quite frankly, that’s going to be the same thing I would tell you in almost any market that you are trading right now is that there is so much uncertainty in the world. The Australian dollar course takes the brunt of that as it is so interconnected with global trade overall.
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