The Australian dollar has been weak on Wednesday, as we continue to see a lot of noise around the 200 Day EMA.
AUD/USD
The Australian dollar has dropped a bit during the early part of the trading session on Wednesday as we continue to dance around the 200-day EMA. The 200-day EMA is an indicator that a lot of people will be watching for trend direction. That being said, I think the market is waiting to see whether or not the jobs report on Thursday shocks the markets or, perhaps more importantly, has the markets thinking that the Federal Reserve may have to stay tight or maybe it gives them a little bit of breathing room. Right now, they are priced to do 2 interest rate hikes between now and the end of the year. We'll have to wait and see whether or not that plays out that way, but it certainly is weighing upon the Australian dollar.
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Risk Appetite and Key Technical Levels
Furthermore, the Australian dollar is sensitive to the global risk appetite scenario, and in this type of situation, I think you have to believe that markets will continue to be on edge because of the potential supply chain disruptions. The market is likely to be very noisy and very difficult, but I would keep an eye on the 0.6950 level as it is an area that in the past has been both support and resistance. I think if we can clear that area and close above that on a daily chart, it becomes a bullish sign.
If we break down from here and clear the 0.6850 level to the downside, that could open up further selling, perhaps sending the Australian dollar down to 0.67. That being said, keep in mind Thursday is going to be noisy because of the jobs number and, of course, the fact that Friday will have the Americans away.
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