- The Australian dollar dipped early Tuesday but rebounded as traders again priced in aggressive Fed cuts, keeping the pair highly rate-sensitive and range-bound.
- Key levels at 0.64, 0.6550, and 0.67 continue to define its broad consolidation.
The Aussie dollar has initially fallen during the trading session, but here on Tuesday, everybody's excited because they think the Federal Reserve is going to be aggressive with its rate cuts again. This is something that we see change every 36 hours or so, and therefore, extraordinarily rate-sensitive currencies like the Australian dollar will continue to be chaotic.
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Support Area
The 0.64 level below continues to be a floor in the market, and I think that is something worth paying attention to. It's the bottom of a larger consolidation area, and that needs to be paid close attention to, as it has already proven itself to be important a few times. Ultimately, I think this is a market that is still consolidating in general, and that's something that you need to be aware of.
After all, this market is one that shot straight up in the air in April, like everything else risk-related did, but then just kind of didn't do anything. So, if you're a range-bound trader, this is probably your market at the moment. You probably love the Australian dollar as it clearly has the 0.64 level as a floor, the 0.67 level as the ceiling, and the 0.6550 level as, for lack of a better term, fair value.
With that being the case, I think that we do rally a little bit from here, but I'm not looking for a major move. I think this is a situation where traders are just simply looking for some type of directionality, but shorter-term traders are just playing the back-and-forth range-bound game and probably have been doing quite well for the last four or possibly even five months.
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