The Australian dollar dropped a bit in the early part of the session on Friday, as we tested short-term support in the form of 0.71 in this pair.
AUD/USD
The Australian dollar fell to kick off the trading session on Friday but has since bounced to show signs of resiliency. This is a market that continues to pay close attention to the interest rates and the market's determination of potential risk appetite.
Keep in mind that Australia is heavily influenced by commodity markets, and of course, we have to look at this through the prism of what's going on in America. It appears that the Federal Reserve is likely to raise rates by 25 basis points between now and the end of the year. If that is in fact the case, it does put a little bit of an overhang on this pair as the Australian dollar won't be as attractive if the rates in America are in fact going to go higher over the longer term.
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Technical Analysis and Key Trading Ranges
That being said, you should also keep an eye on the fact that we are basically in the middle of a large trading range between the 0.69 level at the bottom, at least potentially, and the 0.7150 level. The 200-day EMA is sitting near the 0.69 level, and I think that represents a major point on the chart. If we were to break down below there, then we could see the Australian dollar really start to unwind.
As we are basically in the middle of this range, I think we probably continue the short-term consolidation between 0.70 on the bottom and 0.7075 on the top with an eye on those other levels, because if we do break out of this short-term range, we know where the next buying or selling pressure could be.
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