- The AUD/USD is still fluctuating while we search for a major move, which might not happen anytime soon.
- I guess with this, you will have to trade it more on the basis of short-term changes than anything else.
- This market remains stuck more than anything else, and therefore we see a lot of churn at this point in time.
The Aussie Dollar Continues to Chop Back and Forth
Early on Tuesday, the AUD/USD fell below the 0.65 mark as the market continued to exhibit erratic behavior. This market, in my opinion, still views the 0.65 level as a bit of a price magnet, which makes some sense given that it was previously an area of formidable resistance. Thus, it seems to reason that some market memory is involved in this. The 0.6450 level is immediately below, and since we recently saw a swing low there, I believe a lot of people will be keeping an eye on that area. The 50-day moving average, 200-day moving average, and 0.66 level are possible resistance levels shown above. It seems reasonable that many individuals will try to capitalize on the momentum if we break out of this area.
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The Australian dollar is not performing well, but it is also not necessarily melting down, so it is hard to find a cause to go too aggressive in one side or the other for anything longer than a short-term trade at this time. Recall that the Asian economy and the notion of global expansion are what propel the Australian dollar. The US currency and Federal Reserve's monetary policy, which, while tight, should, in principle, be freeing up later this year, is, of course, the other side of the issue. Having said that, I believe you have the makings of a range-bound pair, and that may hold true for the majority of the year. However, if we do break below that 0.6450 level, you should look around the Forex market because the US dollar may be strengthening against nearly everything at the same time.At that moment, 0.63 would very certainly be the result. Keep in mind that the Australian dollar is mostly based on risk appetite, so you must assess that as well.
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