The Australian dollar rose on Tuesday, as we continue to pay close attention to the 200-Day EMA.
AUD/USD
The Australian dollar rallied a bit during the trading session on Tuesday as it peaked above the 200-day EMA. That being said, the 0.6950 level continues to be a bit of resistance, and you could make an argument for it being an area that could be a short-term ceiling.
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If we can break above there, then it would be an obvious bullish turn of events, opening up the possibility of a move to the 0.70 level. As we dance around the 200-day EMA, it makes a certain amount of sense that we would see quite a bit of choppiness.
Overall, I think that this candlestick for the Tuesday session could at least be an attempt to turn the trend around, but if we were to break down below the bottom of the candlestick, then it opens up the possibility of a move down to the 0.67 level. The 0.67 level is an area that has been very important for some time, and an area that I think would attract a lot of value hunters.
Global Drivers and Inflation Pricing
The US dollar continues to see quite a bit of strength in general, and the question now is whether or not that can continue. Ultimately, I think this is a situation where the Australian dollar continues to be looked at with a little bit of skepticism, as the global supply chain will be an issue, and of course, the commodity markets are starting to price in less in the way of inflation.
If that's the case, then the Australian economy, thereby the Australian dollar, probably suffers as well.
I'll be watching this very closely because if we can break above the 0.70 level and we see the US dollar weaken across the Forex world, then maybe this is worth going long. If we break down below the bottom of the candlestick for the trading session on Tuesday, I am more than willing to start shorting here, perhaps aiming for that 0.67 level.
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