The Australian dollar fell during the trading session after initially trying to rally, as the week started out with a definite “risk off” type of feel to it.
The Australian dollar has initially tried to rally during the trading session on Monday but gave back the gains rather quickly as the 0.73 level continues to be a bit of a headache for the buyers. Having said all of that, there is significant support underneath and if you are going to be buying the US dollar, you probably should not be doing it against the Aussie as it has been so strong. This could simply end up being a nice pullback, but at the very least there should be plenty of support underneath to make this a lot slower going down as opposed to other currency pairs such as the EUR/USD and GBP/USD pairs.
The 50 day EMA is currently near the 0.72 handle, so that is most certainly something to pay attention to, and therefore you need to take a look at the possibility of a reversal in that general vicinity. If we do get a reversal in that area, make sure that the rest of the currency pairs out there are going anti-dollar as well. Because of this, the market will more than likely continue to see a lot of noisy trading, so I would be very cautious about jumping into the short side. However, if you see this pair breakdown you may use it as a secondary indicator for some of the other currency pairs out there that I had mentioned. Of special interest might be the NZD/USD pair as it will tend to mimic what goes on here but does not have anywhere near the support that we see for the Aussie.
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