The Australian dollar has rallied significantly during the week, reaching towards the 50 week EMA which sits at the very top of the candlestick. If we pull back from here, it does make quite a bit of sense that the market could drift a few handles lower, because we are right where the massive break in support occurred. This is an area that at least from a technical analysis standpoint should be quite interesting for sellers, and therefore I think it will attract quite a bit of attention. Furthermore, with even more telling is that Donald Trump is coming with an announcement involving China heading into the weekend, and that more than likely will not do many favors for the Aussie dollar as well.
AUD/USD Video 01.06.20
That being said, if we were to break above the 0.67 level on a daily close, then I think we start to think about the market reaching towards the 0.70 level. Breaking above there would change the entire trend, something that I do not anticipate seeing. Yes, this has been an absolutely brutal bounce, but I think that in the end it is just that: a bounce. However, I am willing to follow the market and admit that I am wrong if we do break out to the upside.
Remember that the Australian dollar is overly sensitive to the Chinese situation, which of course could get overly complicated relatively soon. With that being the case, I think that the Australian dollar will probably take it on the chin. For what it is worth, the Aussie stock market looks absolutely horrible.
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This article was originally posted on FX Empire