The Australian dollar sold off very aggressively on Tuesday, falling all the way to the 200 Day EMA.
AUDUSD
The Australian dollar has been very negative during trading on Tuesday, as we continue to see the US dollar really start to pick up strength.
This is despite the fact that the US dollar has actually seen interest rates in the United States drop; that's a bit of a strange proposition, but it seems as if the world is very concerned at the moment, and risk appetite just continues to get obliterated.
Top Regulated Brokers
The noise in the Middle East certainly is not helping the situation, and as long as there are a lot of concerns about what goes on between the Americans and the Iranians, it is a bit difficult to get aggressively bullish on any type of risk asset.
The Australian dollar, of course, is highly levered to commodities, and traders are now starting to bet on the idea that perhaps inflation isn't going to be as bad as people had thought.
If that ends up being the case, that also works against gold and other major inputs when it comes to the Aussie dollar.
Technical Analysis Standpoint
From a technical analysis standpoint, it's worth noting that we are attempting to bounce from the 200-day EMA, so that'll be interesting to see whether or not it actually holds up.
If it does in fact hold up, then the next bullish sign would be if we can break above the 0.6950 level.
That's an area that's been important multiple times in the past, so I would certainly be paying close attention to it if it does, in fact, get broken to the upside. That would be a healthy sign of a market that wants to go higher eventually.
On the downside, if we were to break down below the 200-day EMA, then you have to keep in mind that the 0.6825 level was a swing low, and then after that, you could be looking at 0.67 as a potential target.
Ultimately, I believe this is a market that is going to move right along with the other US dollar-denominated pairs, as the US dollar is by far the big winner over the last couple of days.
Ready to trade our AUD/USD Forex forecast? Here’s a list of some of the best Australian forex brokers to check out.